It will be interesting to get a gander at Amazon.com. Inc.’s (NASDAQ:AMZN) holiday shipping tab when the e-tailer releases its fourth-quarter results Feb. 7.
The Seattle-based company said today that more than 1 billion items were shipped “for free” over the holidays by U.S. customers using its “Prime” service. That was part of what the company called a “record-breaking” holiday season across its worldwide system. The secretive Amazon did not disclose global volume figures, and did not define the term “items” in the context of its statement.
Amazon delivers about 10 percent of its own packages, according to data from ShipMatrix, a consultancy. The U.S. Postal Service handles about 62 percent, UPS Inc. (NYSE:UPS) 21 percent, and FedEx Corp. (NYSE:FDX) 7 percent, based on ShipMatrix data. The Amazon-centric figures also include traffic that is moved on its behalf by other delivery providers.
The surge in US traffic eligible for free shipping was due to Americans purchasing 30-day trial subscriptions to the “Prime” service, which offers unlimited and guaranteed two-day deliveries of all eligible items on Amazon’ site, and to the company’s decision to waive, effective Nov. 5, holiday shipping charges for non-Prime members who spent $25 or less. The program was available only in the US, and it marked the first time all US customers received standard shipping–defined as deliveries made 2 to 5 business days from an order’s processing–since Amazon launched free shipping 16 years ago.
In last year’s fourth quarter, Amazon’s shipping charges totaled more than $7.3 billion, a 31 percent increase from the 2016 totals. Amazon is building out its own shipping and logistics network ostensibly to meet its delivery guarantees amid soaring demand for orders. Amazon has denied that the strategy is designed to take market share from its delivery partners. However, third-party merchants that today use Amazon for merchandising and fulfillment buy others for delivery, may find it appealing to have Amazon as a one-stop shop for everything. Third-party merchants today account for nearly half of Amazon’s customer base.
The 2-day delivery clock under Prime starts ticking from the time an order is shipped out. Next-day deliveries are free to Prime members whose orders are at least $35, hit certain delivery cut-off times, and whose shipments are bound for specific markets. Prime costs $119 a year, or $12.99 a month.
