Amazon created the free shipping business model over two days for Prime members. Now, the ecommerce giant plans to cut that shipping time to one day worldwide.
Speaking April 25 on the fiscal call, CFO Brian Olsavsky said Amazon would spend upwards of $800 million in current second quarter on fulfillment expenses related to cutting the shipping window in half.
Amazon said it generated the largest number of new Prime members in 2018, due in large part to free shipping on more than 100 million items.
The company currently offers one-day, same-day and two-hour (Prime Now) shipping on select items for an additional fee. Most free shipments are two-day.
“Our goal is to evolve the two-day shipping program into the one-day shipping program,” Olsavsky said. “We think that will open up a lot of potential purchases. We expect to make steady progress quickly and through the year.”
He said the switch would requiring building-out shipping capacity both internally and with third-party services such as UPS and the U.S. Post Office.
“We’ll just have to see what changes have to be made to get more [product} selection into that one-day category,” Olsavsky said.
Amazon last year became the largest single customer for Mercedes Sprinter vans in the world — a purchase it has incorporated into branded Prime delivery fleet.
“We really think it will be groundbreaking for Prime customers,” Olsavksy said.