Amazon says it delivered 1 billion holiday `items’ for free under Prime service

Free, free everywhere (Photo: Shutterstock)

It will be interesting to get a gander at Inc.’s (NASDAQ:AMZN) holiday shipping tab when the e-tailer releases its fourth-quarter results Feb. 7.

The Seattle-based company said today that more than 1 billion items were shipped “for free” over the holidays by U.S. customers using its “Prime” service. That was part of what the company called a “record-breaking” holiday season across its worldwide system. The secretive Amazon did not disclose global volume figures, and did not define the term “items” in the context of its statement.

Amazon delivers about 10 percent of its own packages, according to data from ShipMatrix, a consultancy. The U.S. Postal Service handles about 62 percent, UPS Inc. (NYSE:UPS) 21 percent, and FedEx Corp. (NYSE:FDX) 7 percent, based on ShipMatrix data. The Amazon-centric figures also include traffic that is moved on its behalf by other delivery providers.

The surge in US traffic eligible for free shipping was due to Americans purchasing  30-day trial subscriptions to the “Prime” service, which offers unlimited and guaranteed two-day deliveries of all eligible items on Amazon’ site, and to the company’s decision to waive, effective Nov. 5, holiday shipping charges for non-Prime members who spent $25 or less. The program was available only in the US, and it marked the first time all US customers received standard shipping–defined as deliveries made 2 to 5 business days from an order’s processing–since Amazon launched free shipping 16 years ago.

In last year’s fourth quarter, Amazon’s shipping charges totaled more than $7.3 billion, a 31 percent increase from the 2016 totals. Amazon is building out its own shipping and logistics network ostensibly to meet its delivery guarantees amid soaring demand for orders. Amazon has denied that the strategy is designed to take market share from its delivery partners. However, third-party merchants that today use Amazon for merchandising and fulfillment buy others for delivery, may find it appealing to have Amazon as a one-stop shop for everything. Third-party merchants today account for nearly half of Amazon’s customer base.

The 2-day delivery clock under Prime starts ticking from the time an order is shipped out. Next-day deliveries are free to Prime members whose orders are at least $35, hit certain delivery cut-off times, and whose shipments are bound for specific markets. Prime costs $119 a year, or $12.99 a month.

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Mark Solomon

Formerly the Executive Editor at DC Velocity, Mark Solomon joined FreightWaves as Managing Editor of Freight Markets. Solomon began his journalistic career in 1982 at Traffic World magazine, ran his own public relations firm (Media Based Solutions) from 1994 to 2008, and has been at DC Velocity since then. Over the course of his career, Solomon has covered nearly the whole gamut of the transportation and logistics industry, including trucking, railroads, maritime, 3PLs, and regulatory issues. Solomon witnessed and narrated the rise of Amazon and XPO Logistics and the shift of the U.S. Postal Service from a mail-focused service to parcel, as well as the exponential, e-commerce-driven growth of warehouse square footage and omnichannel fulfillment.