After amassing over 100 million Prime customers with the lure of free 2-day shipping, Amazon is now spending over $800 million to make 1-day shipping the new Prime default for U.S. members. Amazon not only wants to deliver your packages wherever you want - an Amazon locker, your garage, the trunk of your car - they want you to get it right away. Did you know they'll even deliver a package to you at Coachella? Rock on!
According to a report published by RBC Capital Markets and reported by CNBC, they're already offering 1-day and same-day delivery to 72% of the U.S. population.
There are still a handful of states without same-day and one-day delivery options that Amazon will have to spend a considerable amount of resources on to add into the fold. The East and West coasts have pretty solid coverage but Central and Midwest U.S. (besides Texas) present a big hole to fill. According to RBC, here are the percentage of households covered by Amazon's same-day or 1-day delivery as of 2018:
What does this mean for the competition?
Now that Walmart and Target are finally catching up with Amazon's 2-day shipping offering, they're now going to face the next challenge (and financial strain) of keeping up with Amazon yet again. Shares dropped for both companies after Amazon announced their new plan.
Walmart and Target both responded to the news by calling out Amazon on the fact that customers have to pay a membership fee in order to access their quick shipping options.
A Target spokesperson told CNBC:
"Today, Target guests have numerous ways to shop same-day and receive their purchases within hours. We have a range of options that make shopping easy and convenient, including our in-store shopping experience and delivery from Shipt in nearly 250 markets. Our Drive Up service is at more than 1100 stores and Order Pickup services at all 1850 stores – both free, no-membership-required services."
Walmart responded on Twitter:
Maybe Walmart has something up its sleeve?
Both Target and Walmart have found considerable success with in-store pick-up, an option that has become increasingly popular with shoppers. But will customers still leave their house if they can have an order delivered to their doorstep the next day or even the same day - for FREE? In today's world of consumers who seek instant gratification yet increasingly don't want to leave their house to get it, that's pretty hard to beat.
It's Prime Time
Are you an Amazon Prime member? Is free, fast shipping the main reason you joined Prime? What other benefits/features do you use? If Walmart offered free, 1-day shipping options without membership fees, would your loyalty to Amazon change? We'd love to hear from you! Email us: firstname.lastname@example.org or give us a call: (303) 536-5505.