Amazon is well-known as the online store provider that can ship just about anything to any place, in a touted two days. Truth be told, two days delivery time is extremely impressive and probably doesn’t need to be too much faster for most common folk around the world. And yet, Amazon is spending millions and millions of dollars to update their infrastructure to a level where they will be able to deliver products in a breakneck speed of one day.
Why Amazon feels the need to spend $800 million to upgrade a two-day shipping time to one day is something of a mystery: Prime members seemed mostly content with a two-day shipping speed, but Amazon being the innovating company that they are, thinks they can do even better, and potentially make a significantly higher profit. Of course, perhaps the real reason for this upgrade is simply that Amazon is trying to stay ahead of the curve. Increased ability by popular retailers such as Walmart and Target to deliver online purchases quickly has allowed them to grow as competitors with Amazon. However, it’s unlikely that said retailers will be able to compete with Amazon Prime when it reaches the ability to deliver products in a single day.
Of course, it is clear that this Prime upgrade will be an expensive investment for Amazon, so it’s no surprise that the price of Amazon’s services are increasing as well. Last year, Amazon had already boosted its Prime membership cost to $119 a year, which was $20 higher than previously. And the one day deliveries will have a $35 minimum charge. Amazon has been asking for more money as time goes on, and it could be that the increase in service is hoped to make Prime membership seem more worthwhile.
The infrastructure upgrade will primarily be carried out in the United States, which is Amazon’s biggest market, but changes are either being made in other parts of the world or have been made already. Shipments in the European Union are primarily one-day already. Shipments in Japan are almost entirely same-day. Of course, with those areas being smaller than the US by a fair margin, it’s no surprise that the changes have been implemented more easily there.
As for how Amazon plans to go about actually implementing these changes, they seem to have many plans in motion. A $1.49 billion air cargo hub is being constructed in Kentucky, with dozens of air cargo planes and thousands of trailer trucks being purchased. Amazon also launched Amazon Flex, a service that will allow Amazon to deliver products through contract workers. Amazon has partnered with several smaller shipping companies to increase their reach.
In short, Amazon is stepping up their game, at great cost. Whether or not the increase in ability to deliver goods quickly will increase the number of people that subscribe to Amazon Prime remains to be seen. However, considering the reputation Amazon has, it seems likely that their upgrades will be met with a fair amount of success.