Amazon Inc. (NASDAQ:AMZN) to go for a global same-day delivery service?


Amazon Inc. (NASDAQ:AMZN) is now thinking to offer its same day delivery globally. It is doing so in order to compete with the physical retail stores out there that are gaining the advantage of instant supply. Amazon Inc. (NASDAQ:AMZN) along with its products is also thinking to supply 3rd party products that are available on their site on the same day of order. This move is appreciated by some logistic experts who say that this would help Amazon Inc. (NASDAQ:AMZN) to offset the high costs of the last mile speedy delivery.

Amazon Inc.’s (NASDAQ:AMZN) ambition to have a global same day delivery program was repeatedly announced in the listings of at least 7 senior products and Marketing based jobs at the headquarters of Amazon Inc. (NASDAQ:AMZN) that is in Seattle. This includes the three job vacancies posted online in this week. One of the job listings that were posted in the month of October said that Amazon’s long term goal is that customers receive their order on the same day they have ordered the product.

However, from this it isn’t clear that after exactly what time period is Amazon Inc. (NASDAQ:AMZN) going to offer the same day shipment globally as in the above statement it is mentioned as a long term goal and therefore the exact time period cannot be inferred. Also it is difficult to understand Amazon Inc.(NASDAQ:AMZN) would cater to its third party products as well because these third party products account for nearly 40 % of items sold on Amazon and the fees these third parties pay is usually in the range of 8 % to 20 %.

Amazon Inc.(NASDAQ:AMZN)currently offers the same day delivery in only some parts of the U.S., and to be precise it’s only in more than 12 cities in the whole of United States. The charge of the same day delivery for Amazon Prime members is $ 5.99 whereas non-Prime customers have to pay a charge of $8.99. The company also launched its same day operation in the United Kingdom as well.

The idea of same day delivery seems good but when it comes to competing with the retail outlets the cost is an important factor (NASDAQ:AMZN). In the first three quarters of 2014 the cost of shipping quickly proved to be nearly two times higher than the shipping revenue generated. Amazon’s rival EBay has decided to cut back on its same day delivery initiative implying that there is not enough demand.

However, Amazon Inc. (NASDAQ:AMZN) is facing competition from Google Inc. (NASDAQ:GOOGL) which has also expanded its same day delivery and along with other new businesses such as Instacart and Postmates that offer on-demand delivery. Analysts say that Amazon Inc. (NASDAQ:AMZN) could generate a large revenue through its same day delivery program.

According to a survey, only 4 % of Amazon’s customers used the same day delivery option but the amount these customers spent was 15 % more than what other customers spent. Amazon should try to get more third party sellers to offer same day delivery alongside Amazon so that Amazon’s costs could be minimized.