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Amazon is spending $800 million to make free one-day shipping standard for Prime

Posted at 5:49 AM, Apr 26, 2019

More than a decade ago, Amazon launched its Prime membership service with the promise of free two-day shipping. The unique offer helped attract millions of subscribers, shifted consumer expectations for shopping convenience and forced other large retailers to try to catch up.

Now, Amazon is spending big to cut that shipping window in half.

Amazon announced Thursday that it plans to invest $800 million in the second quarter of 2019 toward making one-day shipping the standard offering of Prime.

"Our goal is to evolve the two-day free shipping program into the one-day free shipping program, and we're making strides on that," Brian Olsavsky, Amazon's CFO, said on a conference call with analysts Thursday after the company reported record quarterly earnings . "We feel like we are doing something very important for the customer."

Olsavsky didn't specify when this option would be standard for all Prime customers, but he said Amazon expects to "make steady progress quickly and through the year."

Almost exactly a year ago, Amazon raised the price of Prime memberships from $99 to $119 per year. While the membership includes benefits such as access to original TV shows and music streaming, the core selling point has always been complimentary expedited shipping.

CEO Jeff Bezos has said that he wants Prime to be such a good deal that people would be "irresponsible not to be a member." Amazon now has more than 100 million subscribers who pay for the service.

By building out the logistics capacity to support one-day shipping, Amazon may not only be able to justify raising the cost of Prime again in the future, but also expand the types of products consumers are comfortable ordering online.

Amazon already offers one-day shipping for certain products and customers, but it does not come standard for all. The company also offers two-hour deliveries on certain items with its Prime Now same-day delivery service.