Amazon has achieved another milestone in its long history of breaking new ground in the retail world.
The company is launching free same-day shipping — every day of the week, including Sunday — for free. There are some exceptions, of course. Orders must exceed $35; you must place the order by noon to receive it by 9 p.m.; and only one million items are eligible. You also have to be a member of Amazon Prime, the retailer’s $99 loyalty program.
But the addition of a free same-day shipping program in 500 U.S. cities adds a huge competitive edge to Amazon Prime’s already long list of benefits, which rivals are just beginning to try to replicate.
In an interview with GeekWire, Amazon Prime VP Greg Greeley said it took all of the company’s departments, from logistics to fulfillment, to make this complex offering a reality.
Here’s an edited version of our chat, which has been shortened for brevity and clarity:
What are you launching today?
Greeley: Life just got easier for Prime members in 500 cities and towns. Customers can now come to the site as they normally would, on the PC or mobile app, and choose from over a million items — if you order before noon, we’ll deliver by bedtime, all for free for Prime members. I like to think of it as a way to get people back their time. They can check off their to-do list with a few clicks and spend their time doing what they want to do.
Is this separate from Prime Now?
To help people understand the difference, Prime launched in 2005 with one million items that can be shipped in two days, with the notion that having fast free two-day shipping is an everyday experience instead of an occasional indulgence. Then, we added selection, and then in 2009, we launched same-day delivery. We also lowered the price [of same-day delivery] for Prime members during that period, and now we lowered it to free.
Prime Now is for tens of thousands of items and everyday essentials, and things you desperately need in an hour or two, like if you run out of toilet paper or toothpaste or other grocery items, like diapers. It’s the breadth of selection where you can order before noon and get it that evening. That’s the main difference. We have this continuum of different ways we are serving Prime members.
We like giving members alternatives so they can choose what meets their needs, but today, the next big thing for Prime members is introducing same day for free.
Same-day shipping used to cost $5.99 for Prime members; how does Amazon continue to lower prices?
Greeley: That is something we focus on every single day. I’ve been here 15 years, and we spend all our time on how to lower prices and this is just another example. Since I took over the Prime program a year and a half ago, we continue to look at how we can lower prices, but it’s also what can we do to make Prime customers’ lives better. How can we leverage everything Amazon is doing and bring those to our Prime members? And, so, this is another one. We have the capability to delivery millions of items same day, and the team’s been working hard to give us the capacity. As for pricing, we like to think of it as the best deal in the history of shopping and today it only gets better.
Right now, the Prime promise is two-day shipping, so same-day seems like a huge leap in speed. What does it take logistically to pull this off?
Greeley: Yes, it leverages all the investments we’ve been making over the past 10 years. We continue to invest in more fulfilment centers, closer to metro areas, and invest in new supply chain software, and we’ve invested in more selection locally, and we’ve worked with lots of partners to ensure a fast accurate delivery service before 9 p.m.
It’s really leveraging all the things the teams are working on to deliver this capability at scale.
But what delivery modes are you using: USPS, UPS, FedEx, bike messenger? Uber? Drones?
Greeley: For this service, we know we want to provide customers the maximum selection they can order before noon and receive that evening. We are leveraging all types of carriers. It depends by region, and city. We have lots of different methods to provide delivery that same evening. I can’t pinpoint to one, but it’s lots of them, and as we continue to grow the service, we are bringing on more partners, as well.
What’s the variety? Is it even bike messengers?
Greeley: Prime Now is, but back to the selection we are offering, some of these are large heavy items, so it’s not suitable for a bicycle: TV, stereos, speakers. We definitely have ground transportation for these items.
Are you using Amazon’s own fleet?
Greeley: Where those exist, but we are mostly working with third-party carriers to deliver this. A lot of customers won’t necessarily notice the difference, but rather than coming in two days, we are coming the evening. The beauty of this is that it’s seven days a week. We make this available everyday, including Sunday. Mid-week, customers can race their package home from work and see who gets there first.
Will all these additional perks lead to another price increase eventually?
Greeley: We pride ourselves on Prime being the best deal in shopping. We launched in 2005 and at that time introduced it as free-day shipping as an everyday occurrence. The following nine years, we continue to add benefits, by increasing selection, adding fulfillment by Amazon, and even then if you go back to 2005 dollars, and based on inflation and transportation costs, it would have been $106.
I think of 2014 as a reset to stay aligned, but we spend all our time at Amazon on how to lower our prices for members.
What do you expect people to order?
Greeley: In Seattle, some of the popular same-day items already include the Kindle Paperwhite, GoPro cameras, Bluetooth speakers, HDMI cables, ear thermometers and pet products. They are things you don’t necessarily need tonight, but you want tonight. I think that list will continue to expand, particularly now that we’ve made it easy to find those items with the designated badges. They can run through their to-do list, and spend their afternoon on things other than running errands.
With success comes copycats. How do you feel about all the Prime competitors emerging, from Walmart to Jet.com?
Greeley: We’ve really focused more on what we can do. Our plans are all about making Prime better for customers. How do we continue to make Prime a great service? And, that’s what we are heads down doing.
With today’s announcement, it’s about saving you more time, and I love the idea of Prime making your life easier, and if we can save you more time, it does that. We are way more focused on what’s the next thing to do to invent on behalf of customers and to make their lives easier than any external noise.
It’s interesting that after all these years, and after adding benefits, like video streaming and ebook rentals, you are still innovating on the original idea — shipping:
Greeley: Each one of those benefits we offer are cutting to the core, and represent the best of Amazon. I don’t think of it as a shipping program. I think of it as a way to make a customer’s life easier, and of course same-day is proof positive that we are trying to make it better everyday.
Prime Now is available in seven cities. When will it be available in Seattle?
Greeley: Prime Now and same day are big innovations this year and we are committed to expanding them. It’s been fun to see how people have responded to Prime Now. When you read feedback on social networks or in emails on same day, people call it a game-changer, but really it’s a life changer when you know you can order a package at noon and have it that evening.