Amazon can offer a one-day courier service to 72% U.S. people

Amazon has announced a major welfare measure for Prime members, with goods being delivered faster from the past two days to one day, which will lead to higher spending on Amazon, But the move would raise the competitive threshold for retail rivals such as Wal-Mart.

According to US financial media CNBC, the Royal Bank of Canada (RBC) capital Market report released in March this year shows that Amazon has been able to provide 72% of the U.S. population with the day and the next day delivery service.

In 16 of the richest and most populous states, as well as Washington, D.C., Amazon’s service has covered almost all households (more than 95%).

Royal Bank of Canada (RBC) said the huge delivery network was the result of a large investment by Amazon over the past 4 years. In that time, Amazon has built delivery centers across the country, nearly tripling the size of the country’s logistics infrastructure. Amazon’s new logistics space is twice times the size of Home Depot’s current size.

“We see Amazon’s one-day delivery service raising consumer expectations and increasing the cost of competing in e-commerce,” said analysts at Morgan Stanley after RBC’s appeal.

“The long-term benefit is that distribution centres will have faster turnover rates, which will generate more revenue,” Rizuho Securities wrote in a recent report.

Amazon has proposed plans in its latest earnings to speed up the two-day free delivery currently enjoyed by Prime member service users to one day, and the report shows that Amazon’s plans are progressing well. Amazon Prime members pay $119 a year for services including fast delivery, unlimited music and video, and exclusive deals.

The RBC Capital Markets report showcases the development of Amazon’s logistics facilities over the past 4 years. Currently, the network covers most of the coastal cities of the United States, as well as the major metropolitan areas of Texas and the Midwest.

RBC Capital Markets noted in a separate report that “the faster the delivery speed, the more people shop.”

Most retailers in the U.S. market are just starting to offer “two-day up” delivery services and will be forced to invest more in improving their logistics infrastructure in an effort to keep up with the Amazon. Such efforts may change the speed at which retailers in the U.S. market deliver, which also means that U.S. consumers will receive online purchases more quickly in the near future.

Of course, it’s not cheap, even in a big company like amazon. The company said it planned to spend $800m this quarter alone to expand its one-day delivery service. RBC noted that 15 U.S. states still do not have access to Amazon’s “one-day” delivery service, so the company will have to spend more money to deliver packages to those areas.

The biggest reason people shop in physical stores is that they desperately need to buy a product. By shortening the delivery time to one day, Amazon changed that. Brian Olsavsky, Amazon’s chief financial officer, said in a first-quarter earnings conference call that the company had begun to see “good order Trends” after launching a “one-day” delivery service to certain regions.

It is worth mentioning that Amazon’s investment in The courier business is still increasing. Earlier, Amazon’s chief financial officer, Brian Olsavsky, said the company planned to provide a day delivery service to Prime members worldwide to replace the current two days of delivery. Meanwhile, Amazon expects to invest 800 million of dollars in the second quarter to prop up the change.