Amazon says 60% of Prime orders arrive the same day or next day

Amazon says it’s getting even more packages to customers in a day or sooner, a metric the e-retailer is touting to customers as it faces increased competition in online shopping.

The company said Monday that nearly 60 percent of orders placed through Prime in the top 60 U.S. metros in the first quarter arrived the same or next day. This is an increase from approximately 50% in the second quarter of 2023.

It’s a topic that will be of notable interest to investors when Amazon reports first-quarter earnings after the close of trading on Tuesday. Wall Street expects the company to report another quarter of double-digit revenue growth and profits to more than double from a year earlier.

Cost-cutting efforts, demand for cloud computing and faster execution have led to higher profits in recent quarters.

Fast shipping is a hallmark of Amazon’s Prime subscription offering, which charges members $139 a year for perks like two-day shipping and video streaming. The company said it wants to make same-day and next-day delivery the standard and plans to double the number of same-day delivery facilities in the US over the next few years.

“Because we get items to customers so quickly, customers choose Amazon to fulfill their shopping needs more often,” CEO Andy Jassy wrote in his letter to shareholders earlier this month. “We can see the results in a variety of areas, including how fast our everyday business is growing (over 20% year-over-year in Q4 2023).”

According to data from RBC Capital Markets, consumers have been shown to spend and shop more often if they have one-day shipping.

Amazon’s physical footprint grew between 2020 and 2022 as the e-commerce boom fueled by the pandemic prompted the company to rapidly add new warehouses and fulfillment centers to its logistics network. Last year, Amazon redesigned that network into eight regions instead of a national model, which the company says has resulted in faster but cheaper deliveries. Jassy, ​​in its letter to shareholders, noted that service costs, or the cost of delivering a product to the customer, declined in 2023 by more than 45 cents per unit year-over-year.

Amazon already maintains more than 55 same-day delivery sites in the US, mostly clustered around major metropolitan areas. The facilities are roughly 100,000 square feet, compared to a typical Amazon warehouse that can be the size of 26 football fields, and stock a smaller selection of goods that are the best-selling items in each city.

Same-day sites also condense the fulfillment process, usually spread across multiple Amazon facilities, under one roof. The package makes fewer stops on its way to the buyer’s doorstep, reducing shipping costs.

Amazon has stepped up investment in fast delivery like traditional retail rivals Walmart and Target stepped up their delivery game. Walmart says it can deliver items to shoppers in as little as 30 minutes, while Target in March launched a new loyalty program that offers same-day delivery on orders over $35 in just an hour.