Home Business Amazon spends $ 800 million to make a free one-day shipping

Amazon spends $ 800 million to make a free one-day shipping

Amazonian Virgin Food Service van parked on a suburban street in San Ramon, California on July 5, 2018.

Smith Collection / Gado | Stock Photos | Getty Images

Amazonian Virgin Food Service van parked on a suburban street in San Ramon, California on July 5, 2018.

Amazon makes shipping for a day the standard for Prime members.

In order to make the change, it is expected that Amazon will spend $ 800 million in the second quarter on improving warehouses and delivery infrastructures, Olsavsky said. The investment will reduce Amazon's profit margins and the company reported lower earnings forecasts than expected for the period.

Amazon already offers Prime members one-day and two-hour shipping for certain products and at an additional cost. But the change would significantly expand the number of product selections and zip codes that are free shipping for one day, Olsavsky said. According to Amazon, over 100 million items are currently available for free two-day shipping on its website.

Olsavsky noted that the change will initially take place in the North American market, but he wants to expand globally in all countries offering Prime membership. Amazon said last year that it has more than 100 million Prime members worldwide.

Olsavsky said the company would use "all available levers" for free shipping within a day, including existing partners such as the US Postal Service and UPS, as well as its own third-party delivery network. However, he declined to specify certain details such as the schedule for the launch and said that the move involves many different moving parts.

"We are taking a significant step," he said.

SEE: Gene Munster rates the neighborhood of Amazon

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