Amazon is planning on spending approximately $800 million in this quarter to help reduce their delivery time frame for top customers. Now, instead of two-day delivery, top Amazon buyers will be able to enjoy a single day delivery plan. The plan is set in motion to help review their e-commerce franchise, and fight great competition such as eBay, Walmart, & Target.
The announcement was made after their first quarter report exceeded analysts estimate, focusing on the companies cloud-computing, advertising, and other rising businesses paying off. The company has decided to stay ahead while they are on the road to success.
Chief Financial Officer at Amazon, Brian Olsavsky decided to put the attention back on Amazon prime, as their subscription program is the main reason they were able to make Amazon the world’s largest online retailer. As Prime customers are charged with an annual, or yearly fee which is approximately $199 in the U.S. and offers them shipping discounts, video programming, and access to music. Including a two day free delivery on a wide selection of items.
The benefit does not seem as appealing as it did back in 2005 when the company first announced it. Mainly due to the fact that other giant corporations are filling the gap. For instance, Walmart is not only delivering using its giant network but is even encouraging people to place orders online and pick them up at a convenient time. Moreover, during the holidays Target made waves by bringing down their minimum order size, qualifying customers for free shipping.
However, the timeline on the project hasn't been rolled out, but it is expected to make major headlines soon. In addition, the company aims to make steady progress using a specific system and then expand its one-day delivery protocol to a global level.
Recently, Amazon encouraged Prime members to group their orders for one-day delivery. This way Amazon is able to save a little on shipping charges, and if customers are able to follow their lead; they will soon be able to put away money for a one-day shipping pledge.
While Amazon kept a lid on their delivery throughout, but as the first quarter ended on March 31st; it was official that Amazon has spent $7.3 billion on delivery. Creating a gain of 21% when compared to last years stats. However, it will still below the pace keeping in mind the following years.
Which is why expenses related to this new perk, and with the suggestion of more coming your way; the profit forecast fell short. As first-quarter earnings were approximately $7.09 per share according to Amazon, whereas analysts had predicted $4.67 per share. While the company is destined to achieve a great deal, Prime members should be set to take on many amazing benefits that will come their way with the passage of time.
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