The strength of Amazon’s delivery network shows how this online retail giant is able to make delivery within 24 hours of ordering the product for Prime members within United States. According to a report published by RBC Capital Markets in March this year Amazon can carry out deliveries to 72 percent of its user base within same day or next day which includes nearly 95 percent of US households located in 16 wealthiest locations of most heavily populated states including Washing DC. This reliable delivery network is the result of its investments over last four years when it built several fulfillment centers crisscrossing the nation and tripled its logistics infrastructure.
With this infrastructure investment Amazon has managed to build distribution structure that his nearly double of that owned by Home Depot. The network will help Amazon fulfill its long term goals of shortening free shipping plan for Prime Members that pay $199 annually for fast delivery and customer services like non-stop music, video catalog access and other exclusive product deals. Morgan Stanley analysts stated that Amazon’s 1-day shipping service has raised customer expectations and increased competition in the e-commerce market.
Amazon now covers all coastal cities along with several metropolitan locations in Midwest including vast expanses of Texas. After Amazon’s announcement that it will now be able to deliver on same day or next day the retail giant has become a risk to other online retailers that are still fighting two day delivery promises. The firm’s CFO Brian Olsavsky stated during its recent earnings that they are already witnessing strong order trend after rolling out the single day shipping to several areas. The development has affected stocks of competitors as both Walmart and Target have seen their share prices drop after announcement of Amazon which is spending around $800 million this quarter to extend its one-day shipping.
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