Jul 31, 2023 - Economy

Amazon same-day fulfillment takes 11 minutes

Illustration of Amazon shipping box freight truck

Illustration: Eniola Odetunde/Axios

Amazon, ahead of its earnings release later this week, shared a slew of updates on the speed and capacity of its U.S. delivery network.

Why it matters: The tech and logistics giant has been out to prove that the billions it spent to expand its supply chain during the pandemic have been paying off — even as online shopping habits have waned.

Details: Amazon has delivered more than 1.8 billion items to U.S. Prime members the same or next day so far this year, the company said in an announcement Monday.

  • That's nearly four times the volume delivered at those speeds by the same point in 2019.

Between the lines: The company has done it, in part, by putting products closer to customers to start.

  • Amazon says it's been thoughtful about reorganizing the placement of inventory, focusing on regional distribution networks and smaller facilities designed for same-day deliveries to large metro areas.

What they're saying: "Since the beginning of this year alone, the distance between our sites and the customer decreased by 15%, with 12% fewer touchpoints within our middle mile network," Doug Herrington, Amazon CEO of Worldwide Stores, writes in the update.

  • "The people picking, packing, and driving to your house are doing the exact same thing for orders that arrive the same or next day as orders that used to take two or three days."

Be smart: Trimming costs in the company's operations has been a top priority for Amazon CEO Andy Jassy.

  • "I think the second priority I would talk about is just speed,” Jassy told investors earlier this year.
  • Customers "convert at a higher rate when they can see promises of deliveries that are faster."

The intrigue: As Walmart and Target transform their physical stores into fulfillment centers for their growing online businesses, they'll face pressure to develop systems for picking, packing and sorting if they hope to rival Amazon for speed.

  • Notably in Amazon's update, the company took care to say that it takes 11 minutes on average for a same-day facility to get an order ready for delivery.

What to watch: The update suggests that Amazon's near-term profit outlook may be better than expected as it aggressively manages costs, especially for delivery, Tom Forte, senior research analyst at D.A. Davidson, tells Axios.

Disclosure: Forte and/or members of his household holds a long position in securities of Amazon.

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