Fintech & Ecommerce

Amazon to Double Same-Day Delivery Facilities

Amazon on Monday, July 31, announced its intention to double the number of same-day delivery points in the United States.

Amazon to Double Same-Day Delivery Facilities

The e-commerce giant did not specify when exactly the project to increase the number of mentioned objects will be implemented, noting that this will happen in the coming years, without going into chronological details. The company’s executives expect that active investment aimed at developing the firm’s business will allow Amazon to continue to hold a leading position in the space of virtual trade in tangible goods worth $1.4 trillion.

For the e-commerce giant, the issue of the speed of delivery of goods to customers is of fundamental importance. The company reported that in the second quarter of this year, more than 50% of subscriber orders Prime in 60 major US cities were delivered on the same day or a day later. The e-commerce giant also reported that more than 1.8 billion devices have been delivered to Prime users since the beginning of this year. In the second quarter of 2023, the number of deliveries on the day of the order or the next day was four times higher than the same figure recorded for the same period in 2019.

This week, the e-commerce giant will release a report on financial results for the second quarter of this year. Experts say that the company’s management will do everything to strengthen investors’ faith in the field of e-commerce, the state of which is currently not the best. Sales volumes in the online environment have slowed down in terms of growth rates compared to the incredible dynamic that was observed during the coronavirus pandemic. In the context of the issue of making a profit, an increase in the degree of Amazon’s dependence on the cloud computing business is recorded, which also shows a slowing trend.

Analysts forecast the company’s profit of 35 cents per share with sales of $132 billion.

The e-commerce giant did not disclose information about the number of warehouses with same-day delivery, but experts say that doubling this number means the appearance of several dozen new facilities.

Currently, Amazon delivers goods on the day of order in 90 major US cities. Facilities that provide relevant services are smaller in size compared to standard storage warehouses and are located closer to populated areas.

The head of Amazon stores worldwide, Doug Herrington, says that hybrid tools allow the company to collect, sort and deliver goods from one site, which makes the process of delivering orders to customers faster. He also noted that the firm focuses on the specifics of demand, which is typical for a certain region.

The speed of delivery of goods has become a decisive factor in Amazon’s successful move to leadership in the field of e-commerce. The company currently accounts for about 35% of expenses in the American online trading industry. This figure is about six times higher than the result of the nearest competitor, which is Walmart.

At the same time, Amazon’s current stable position for investors is not a reason for calmness and a confident look into the future. They are worried about the reduction of margin costs for packing orders and delivering them to customers. Traditional retailers, including Walmart, have the advantage that their stores are pickup points.

Neil Saunders, an analyst at Globaldata Plc, admits that Amazon’s investments in day-of-order delivery activities will not receive unequivocal and unconditional approval from investors. In his opinion, a position of agreement with this decision will be formed, based on arguments related to the fact that the company will be able to increase the volume of online sales, make the process of virtual purchase of goods more convenient, and increase the level of efficiency of its functioning. But at the same time, according to the expert, some investors will be concerned about the size of the initial costs, since the construction of new facilities is an expensive process and requires a high level of automation. They may also have questions about how long it will take to compensate for the investment.

As we have reported earlier, Amazon Offers Up Marketplace Rule Change to Solve UK Antitrust Issues.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.