Amazon can already be sent to 72% of the US population in one day, showing map
Amazon.com boxes are displayed stacked near a Boeing 767 Amazon "Prime Air" display on a Boeing hangar in Seattle.
Ted S. Warren AP
A closer look at Amazon's delivery network illustrates why the company is now ready to make a day's delivery standard for its Prime members.
Amazon can already offer delivery on the same day and today to 72% of the total US population, including almost all households (95% or more) in 1[ads1]6 of the richest and most populated parts and Washington, DC, according to a report published in March by RBC Capital Markets.
The large delivery network is the result of significant investment over the past four years, a period when Amazon expanded its satisfaction centers across the country and nearly tripled its US logistics infrastructure, RBC said. Amazon has added about twice as much distribution space Home Depot currently owns.
That means the company has a big start in fulfilling the plan presented in its latest earnings report to shorten today's two-day free shipping schedule with a day for Prime members who pay $ 119 per year for fast delivery, as well as services like unlimited music, video catalog access and exclusive offers.
"We see the Amazon's 1-day Prime Shipping raising consumer expectations and increase the cost of competing in e-commerce," Morgan Stanley analysts wrote in a note after the announcement.
The map below from RBC shows four years of change in Amazon's distribution footprint. It already covers most coastal towns, as well as Texas and major metropolitan areas in the Midwest.
"While high-level distribution is still the fastest way for the consumer to acquire a product, Amazon's continued development of the delivery capabilities on the same day and the next continues to reduce the historic competitive barrier and represents an increasing risk for dealers who are too frequent RBC Capital wrote in the note.
After the Amazon announcement, RBC said in another report that "the sooner you send, the more people buy."
Many benefits [19659013] One of the biggest reasons people shop At a physical store is due to the immediate need to get a product. By shortening the delivery time to one day, Amazon changes that equation. Brian Olsavsky, Amazon's CFO, said the first-quarter earnings quality that the company is already starting to see "good orders "after rolling out a day's standard shipping to specific areas.
It has an impact on the stock market as well. e, such as Walmart and Target, saw that their shares fall after the Amazon announcement. Most retailers are now starting to offer two-day shipping and will be forced to spend more on improving their logistics infrastructure to try to keep up with Amazon.
Even in Amazon, the change will not come cheap. The company said it plans to spend $ 800 million during the quarter alone to expand a day's freight. RBC noted that 15 US states still do not have access to Amazon's delivery the same day or today, so the company needs to spend more on reaching these areas.
One Another benefit is enhancements in stock efficiency, as the products are shipped faster, more inventory will move in and out of Amazon's fulfillment centers faster.
"The long-term benefit is that sales are getting faster in the warehouse so that efficiency can be achieved to meet that a percentage of revenue, "wrote Mizuho Securities in a recent note.
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