Amazon Today Offers Same Day Shipping From Retailers, Boosting Prime

Amazon Today Offers Same Day Shipping From Retailers, Boosting Prime

Amazon announced a new offering yesterday which allows Amazon to pickup items from malls and retailers to deliver same day to a buyer's home.

Here are some facts behind it.

* $25 minimum for Prime free delivery, below that $2.99

* The delivery is done by gig workers (Flex) rather than franchises

(Delivery Service Partners)

* Retailer must have an inventory management system (i.e. no Instacart model), and the business must be in a mall or shopping center or other commercial complex.

* The items can be found on Amazon in a program called "Amazon Today". (incidentally introduced on Today show which I'm sure the Amazon marketing team that thought of this was proud of that).

* Open to 10 cities and zip codes.

* PacSun, GNC, SuperDry, Diesel, and others announcing soon

Commentary:

1 - Who is subsidizing the difference in profitability? Is it the retailer? Is it Amazon accepting less margin? Who “pays” for this free shipping?

2 - To the last point, I would love to see the retailer's economics. The item is on Amazon, so does the retailer pay typical Amazon fees? Can the retailer advertise to get higher placement? (I'm assuming the answer to both is yes, but not mentioned)

3 - The Prime angle is interesting. This shows that "Buy With Prime" on an ecommerce storefront is not the only way they are trying to leverage Prime into new areas. You are technically "buying with prime" here, but it's not BuyWithPrime, if you get what I mean.

4 - This is very similar to what Zalando and JD are offering retailers in Europe and JD is offering in China. Zalando calls it "Connected Retail" to drive online sales to be fulfilled from an offline location.

5 - There have been many startups in this same day delivery / last-mile space, which may not welcome this news at least in the short-term. Long-term if consumers like it, it will help everyone.

6 - I'm sure this is about Amazon being able to offer a full logistics solution to some of its brand/retail partners.

7 - Could help drive better unit economics for the Amazon Flex network. That may be where this initiated to improve their volume. It could have also been triggered by Walmart GoLocal ("why haven't we launched this yet, we can do this")

8 - To that point, Amazon has already talked about more customers than Walmart GoLocal already, and they just launched. Tough to be Walmart competing with Amazon Logistics is all I can say.

And my last point is... Amazon is not going to save malls here. It just turns them into a subsidized Amazon fulfillment center ;-)