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Two-day unlimited shipping is likely Amazon’s most popular perk for its Prime members, and it’s about to get even better.
Amazon finance chief Brian Olsavsky said on an earnings call Thursday that the company is working to change the two-day shipping program to just one-day shipping.
He said Amazon is already spending heavily to update its infrastructure to make the change, including $800 million in investments in the current quarter, starting in North America. The program is expected to speed shipping times for Prime members worldwide, Olsavsky said.
Changes have already started, with Amazon in the last month dropping a $35 minimum for one-day deliveries and expanding one-day selection and eligible zip codes, according to an Amazon spokeswoman.
“We’re currently working on evolving our Prime shipping program, which has historically been a two-day program, to a one-day shipping program,” Olsavsky said Thursday following the release of Amazon’s quarterly earnings.
“We’ll be building most of this capacity through the year, in 2019,” he later added. “We expect to make steady progress quickly and through the year.”
The one-day shipping change comes as the world’s biggest e-commerce company has been facing considerably more competition from rival retailers, including Walmart and Target, who are finally starting to catch up to Amazon’s efforts to offer quick shipping for online purchases. It also comes about a year after Amazon boosted its Prime membership cost to $119 a year, up $20. Offering faster shipping could encourage customers to stick with Prime.
Olsavsky said the company expects the speedier shipping will provide convenience and “open up a lot of potential purchases” to customers, encouraging them to buy more stuff on Amazon that they need right away.
The announcement comes after Amazon has already added same-day and one-day shipping to many of its markets, as well as two-hour deliveries through its Prime Now program. In June, as a possible precursor to the one-day shipping plan, Amazon unveiled the Delivery Service Partners program, which supports entrepreneurs to start delivery businesses to ship Amazon packages.
While the US is Amazon’s biggest Prime market, the company has already sped up deliveries beyond two-day in other countries. In the European Union, shipments are mainly one-day and in Japan the offer is mostly same-day, according to Amazon.
The two-day shipping program first launched in 2005 and now allows Prime members to get unlimited two-day deliveries of tens of millions of items. The program helped spark Prime as a must-have for millions of customers and helped Amazon develop a loyal following of shoppers. Prime, which has over 100 million members worldwide, now includes a video-streaming library, music library and cloud storage.
As part of its infrastructure work, Amazon in 2017 announced plans for a new $1.49 billion air cargo hub in Kentucky. It leases 40 Prime Air cargo planes and bought thousands of truck trailers. The company also started Amazon Flex, a gig economy service that lets contract workers deliver Amazon packages, and it already partners with many smaller local shipping companies throughout the country.
Despite all these additional delivery capabilities, Olsavsky said Thursday that Amazon will need to continue relying on its delivery partners going forward — a nod to years-long concerns that Amazon would eventually compete directly with UPS and FedEx as a delivery provider.
The Prime announcement came after Amazon reported a fourth-straight earnings record, but posted slower revenue growth.
First published on April 25.
Updated, April 26: Adds more on Amazon’s latest earnings and international Prime deliveries.