Amazon One-Day Shipping (Explained)

John, Amazon Prime, obviously the two-day shipping was huge, everyone knows that that is a big promise to make to consumers. But it seems like now with this one-day shipping announcement that Amazon thinks they
can double down on it, and that seems like it’s
going to help out brands. What are your thoughts
on one-day shipping? It’s certainly
going to help Amazon and, by extension, brands on Amazon should have sales accelerate
because of it in aggregate. So what happened is over
the last couple of years, Amazon’s always set
the bar for ship times. They set that bar at two days several years ago at this point. And ever since, other e-commerce retailers have been trying to catch up,
and they’ve largely caught up. Not entirel, but they’ve
really closed the gap. So I think Amazon understood
that that gap has been closed, and they want to stay out ahead of it. Now, they’ve announced that
they are not there yet, but they will get to
nationwide one-day shipping on all of their Prime-eligible products in the not too distant future. That may mean sometime this year, it would be great for them if they could announce
that right before Q4. That doesn’t mean it’s
going to happen for sure. It could be sometime next year, but it will probably be
in the next 12 months. So it’s going to be a big impact. It will further put Amazon
ahead of their competition and make it even more critical that brands engage with the platform. Do we think this will
just further increase the number of Prime subscribers as well? Is this just an additional
reason for Prime subscribers? I think it just creates more value in the Prime subscription. So there’s already a tremendous amount of value there frankly, but I
think that is going to continue. So it should create more
value there for Prime. It’s going to have some interesting
side implications for brands. For Seller Fulfilled
Prime that’s now going to mean to qualify for that
program you have to ship, you have to get product
there in a day, not two days. So you’ve effectively cut
your ship time in half, which is a really big deal
for brands that are, frankly, barely getting by with
Seller Fulfilled Prime today. It is a very tough program
to be able to qualify for and then hold onto. So now the bar has been set even higher. That program is suspended
right now in terms of new applicants; I don’t know
if that’s related to this announcement or not. – But it’s going to be
even harder to qualify and maintain that. So, that’s a side
issue, but it’s the same thing for 3PL’s. 3PL’s that have Seller Fulfilled
Prime now, probably not all of those, will continue to
have Seller Fulfilled Prime. Some probably will be able to pull it off. It’s going to make some changes for how brands interact with the platform from an operations perspective and
how customers interact and the new kind of customer expectation. The reality is, Amazon
is not done there either. The next step is same day shipping, six hour, two hour, one
hour, 30 minute ship windows. Amazon’s vision from the beginning, from well over a decade ago, with
the Prime Program, was to get nationwide, in fact,
worldwide eventually, in the developed world, down to
30 minute ship windows on the vast majority of products they sell. That seems like science
fiction right now, but 10 years ago 1 day shipping seemed
like science fiction as well. So they will get there – It’s only a matter of when not if. – It seems like
there are already programs that are happening in certain
locations that already effectively do that. – Absolutely, like Prime Now
1 hour shipping on a much more limited set of products
in only urban areas because of the last mile
considerations that Amazon has to pull off to make that work. But I think Prime now is in
over 50 cities currently, so they’re rolling that out rapidly. I would expect a combination
of Prime Now on Amazon Fresh, (those two programs are being combined) a combination
of those will be the model for just Prime, maybe five
years out, in terms of how that’s going to work
for all Americans… then again, theoretically,
for every member of developed countries.

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