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Amazon gets speedier with free 1-day shipping for Prime

Boxes move down a conveyor belt
An Amazon fulfillment center. Photo: Paul Hennessy/NurPhoto via Getty Images

Amazon is beefing up its Prime membership offering, moving from free 2-day shipping to 1-day.

Why it matters: Retailers are already racing to come close to Amazon's shipping prices and speeds. This will squeeze competition even further.

Context: Amazon has over 100 million Prime members in just the U.S., and there are currently about 100 million products on its site that are eligible for free 2-day shipping.

Details: CFO Brian Olsavsky told analysts the company expects the offering to cost $800 million in the second quarter. He said he expects the move to make Prime even "stickier." Cutting delivery times in half "will open up a lot of potential purchases," Olsavsky said.

The big picture: Amazon reported $7.09 in earnings per share for the first quarter of 2019, plowing through analysts' expectations of $4.72.

  • The e-commerce behemoth saw $59.7 billion in sales this quarter — a 17% jump from Q1 2018.
  • Revenue for its cloud business, AWS, was $7.7 billion. Both revenue figures were in line with analysts expectations.

What's happening:

  • Amazon saw fatter profit margins this quarter, leading to stronger than expected earnings per share. The company reported a record $3.6 billion in net income — more than double last year's $1.6 billion.
  • AWS profits were $2.2 billion, up about 57% from $1.4 billion last year.
  • Amazon also shrunk its losses internationally and doubled operating profits in North America, per the earnings release.