Amazon said it will use "all of the available levers" to shorten the current two-day default shipping plan by one day for members of its Amazon Prime subscription service. The one-day service will be free of charge.
The change was announced by Chief Financial Officer Brian Olsavsky on Thursday and comes at a time when data indicates Prime subscriptions are slowing down.
There were 61 million Prime members in the U.S. in first quarter, unchanged from the second half of 2018. This number is only a 5 percent improvement from the same period in 2018, said research firm Cowen.
"We're currently working on evolving our prime free two-day shipping program to be a free one-day shipping program, " said Olsavsky.
He noted that Amazon "significantly expanded" its one-day shipping zip codes and eligible items over the past month. The one-day shipping will be a "global improvement in speed tied to our Prime program," said Olsavsky.
The change will first take place in the United States and Canada. Olsavsky said the free one-day delivery service will later be expanded globally across all countries offering Prime memberships. Amazon said its Prime subscription service has over 100 million worldwide.
Olsavsky said the company will use all available means for free one-day shipping, including existing partners like the U.S. Postal Service and UPS, and Amazon's own third-party delivery network. He refused to give specific details, saying the move involves many different moving parts.
"We're taking a significant step," he said.
Bringing about this change will see Amazon spend over $800 million in the second quarter to improve warehouses and delivery infrastructure, according to Olsavsky. The investment will slash Amazon's profit margins, forcing the company to give lower-than-expected earnings guidance for the period.
"We're able to do this because we've spent 20-plus years expanding our fulfillment and logistics network, but this is still a big investment and a lot of to-do ahead of us," he said.
Amazon currently offers one-day and two-hour shipping to Prime members for certain products but for a fee. It says over 100 million items are currently available for free two-day shipping on its website. Amazon also offers free same-day shipping to customers in eligible zip codes with orders above $35.
The change to one day delivery will greatly expand the number of product selections and zip codes eligible for one-day free shipping, said Olsavsky.
Amazon believes one-day shipping will help it bring in the next wave of customers. Amazon had 103 million Prime members in the U.S. as of March 31, an 11 percent increase year-on-year, according to research firm Consumer Intelligence Research Partners.
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