Amazon Achieves Its Fastest Delivery Times

Amazon has reported its fastest ever time for Prime deliveries in the second quarter of 2023.

For the 60 largest metro areas, over half of Prime deliveries were same day or next day. Amazon continues to invest in its same-day delivery service–promising to double its same-day delivery facilities in the coming years.

This strategy has allowed the company to gain a 1/3 share of online orders in the U.S, six times that of its closest competitor, Walmart. Amazon also delivered more than 4 times the number of Prime packages so far this year compared to pre-pandemic deliveries. All of this has been achieved with an expanded number of products.

Credit for this increase in delivery times is based on dividing the country into smaller regions, use of AI to predict buyer trends, and a growth in the same-day delivery system. The overall result is a reduction in cost while improving customer service.

Video Spotlight:  

This post is based on the Fortune article, Amazon Wants to Stay on Top of the $1.4 Trillion ecommerce Market and Will Double Its Same-Day Delivery Facilities In ‘Coming Years’, by Spencer Soper, July 31, 2023, and the YouTube videos in the Spotlight.  Image source: f11photo/Shutterstock

Discussion Questions:

1.  How does having smaller distribution regions help Amazon?

Guidance: By placing the products closer to the customer, faster deliveries are possible. However, it does require that Amazon has the correct product at the correct same-day facility. To make same-day delivery more practical, Amazon doesn’t promise that every product will be available for same-day shipping.

2. How can Amazon reduce costs by having smaller distribution regions?

Guidance: The savings result from having a shorter distance to deliver the final product, compared to longer distances for fewer distribution regions. However, there are inventory management advantages for fewer distribution regions. To keep costs down, the correct items must be at the correct facility. Amazon is using AI to predict buying patterns to accomplish this goal.

3. Is same-day delivery the correct strategy for Amazon?

Guidance: The strategy appears to be working, as Amazon controls a third of the online market. The company continues to expand on this strategy, planning to double the number of same-day delivery facilities, and increase the number of products available for same-day delivery.

This strategy enables access to an expanded market. If someone wants an item today, instead of going to a local retail store, they can order the item from Amazon, and have it delivered the same day.

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September 5, 2023 Newsletter
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