Amazon said Tuesday it will expand Same-Day and Next-Day service to 4,000 smaller towns, cities and rural communities by the end of the year as it begins following through on an April 30 commitment to invest $4 billion in its rural delivery network.
Amazon (NASDAQ: AMZN) previously said the capital expenditures will pay for more than 200 delivery stations, tripling the size of the rural delivery network and cutting delivery times in half for Prime members in less populated areas. The expansion announced on Tuesday represents an initial phase of the delivery station-buildout along with steps to use existing facilities for Same-Day and Next-Day service, according to the company. More specifically, it is changing existing rural delivery hubs into hybrid stations that serve multiple functions, including inventory storage and package preparation. The hybrid approach allows Amazon to position products closer to customer households and reduce transportation distances.
In addition to increasing delivery speed through improved use of logistics and technology, Amazon is also increasing the types of essential items available to Prime members for expedited delivery. So far this year the number of items delivered the same or next day in the U.S. increased over 30% compared to the same period last year, according to the company.
Amazon said rural customers will benefit from its delivery service because they live farther from brick-and-mortar retailers, have fewer product and brand choices, and face limited delivery options when shopping online.
“Everybody loves fast delivery. So, whether you live in Monmouth, Iowa or in downtown Los Angeles, now you’re going to have the same fantastic Amazon customer experience: the ability to get the wide variety of items you need to keep your household running every day, delivered the same or next day,” said Doug Herrington, CEO of Worldwide Amazon Stores, in a news release.
The delivery expansion is especially beneficial for customers that don’t want to wait two days for essential groceries and household goods, such as paper towels or diapers.
In the first quarter, Amazon’s fast delivery helped drive its everyday essentials selection to grow more than twice as fast as all other categories in the U.S. Amazon is one of the largest grocers in the U.S., with over $100 billion in gross sales, even when sales from Whole Foods Market and Amazon Fresh are excluded.
Amazon said it already offers free Same-Day and Next-Day delivery to more than 1,000 smaller localities. Customers in those areas shop Amazon’s online store more frequently and purchase household essentials and meaningfully higher rates. Of the top 50 repurchased items for Same-Day delivery in these areas, more than 90% are everyday essentials.
The retail-logistics giant said it is using advanced machine learning algorithms to predict which items will resonate with local Prime members and stocking a mix of the most-popular and frequently purchased items like wireless headphones, coffee pods, crackers, paper towels, and diapers, and products curated to fit local preferences like wild bird food in Dubuque, Iowa, travel backpacks in Findlay, Ohio, and after sun body butter in Sharptown, Maryland.
Some analysts say Amazon’s deeper delivery penetration of rural areas is part of its competition with Walmart, which has an extensive store footprint and online presence.
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
RELATED READING:
UPS to eliminate 20K jobs as Amazon decoupling accelerates
Analyst: Amazon’s $4B rural delivery investment aimed at slowing Walmart
