Amazon, $AMZN, says more packages are arriving in a day or less

Amazon has announced its commitment to delivering even more packages to customers in one day or less, a metric that the e-commerce giant is highlighting as it faces increased competition in the online shopping sector.

According to the company, nearly 60% of orders placed through Prime in the top 60 U.S. metro areas in the first quarter were delivered the same day or next day. This marks an increase from approximately 50% in the second quarter of 2023.

Investors are likely to be interested in this development when Amazon reports its first-quarter earnings after the market closes on Tuesday. Analysts anticipate another quarter of double-digit revenue growth, with profits expected to more than double compared to the previous year.

Recent quarters have seen higher profits driven by cost-cutting measures, increased demand for cloud computing, and improved fulfillment speed.

Rapid delivery is a key feature of Amazon's Prime subscription service, which charges members $139 per year for benefits such as two-day shipping and video streaming. The company aims to make same- and next-day delivery the norm and plans to double the number of same-day delivery facilities in the U.S. in the coming years.

CEO Andy Jassy highlighted the impact of fast delivery on customer behavior in a letter to shareholders, noting that faster delivery leads to increased customer loyalty and more frequent shopping on Amazon.

Data from RBC Capital Markets indicates that consumers tend to spend more and shop more frequently when offered one-day shipping.

Amazon expanded its physical presence between 2020 and 2022, responding to the surge in e-commerce during the pandemic by adding new warehouse and delivery centers to its logistics network. The company restructured its network into eight regions last year, resulting in faster and more cost-effective deliveries.

Amazon has established over 55 same-day delivery sites in the U.S., primarily located near major metro areas. These facilities, which are about 100,000 square feet in size, store a smaller selection of goods that are popular in each city.

The company's increased investment in fast shipping comes as traditional retail competitors like Walmart and Target have also enhanced their delivery services. Walmart offers delivery in as little as 30 minutes, while Target's new loyalty program provides same-day delivery on orders over $35 in as little as an hour.