Amazon to Make One-Day Shipping the Standard on Amazon Prime

Already in the past month more shoppers were receiving the one-day shipping option for eligible orders and in certain areas.

The company also announced that it would be shaking up its Prime membership by offering one-day delivery on most goods instead of two-day.

This new challenge will likely cause both retailers to consider leaning into their stores more, perhaps by increasing the degree that they are used as hubs for same-day delivery, or by finding new ways to lure customers through their doors.

However, Olsavsky dropped a bombshell on Amazon's earnings call Thursday afternoon, saying the company plans to replace two-day shipping with one-day shipping as the standard delivery time for Amazon Prime. The stock has jumped 27 per cent this year.

Still, expenses related to the new Prime perk, and the suggestion of more to come in a profit forecast that fell short of estimates, contributed a dour note in Amazon's otherwise upbeat earnings.

The company projected operating profit of as much as US$3.6 billion, falling short of analysts' estimates and suggesting the company's may be spending more than anticipated on its bets for future growth. Amazon posted a profit of $3.5 billion for the quarter, beating Wall Street analysts expectations. Last year, Amazon changed its method of calculating costs associated with advertising, which partly contributed to the difference in growth rates in the advertising business. "We're trying to take advantage of the fulfillment capacity and transportation capacity ... that we have", the CFO said.

Despite all these additional delivery capabilities, Olsavsky said Thursday that Amazon will need to continue relying on its delivery partners going forward - a nod to years-long concerns that Amazon would eventually compete directly with UPS and FedEx as a delivery provider. The company's digital advertising franchise has grown into the third largest in the USA, trailing only Alphabet Inc.'s Google and Facebook Inc., researcher EMarketer estimates.

The company is delving into even less familiar terrain, too.

Amazon is one of the world's largest camera stores.

Looking ahead, Amazon notes it expects second quarter sales to land between US$59.5 and US$63.5 billion ($84.8 and $90.5 billion) - an annual growth of between 13 and 20 per cent.

Losses narrowed considerably in Amazon's worldwide unit.

  • Wendy Palmer