Amazon.com Inc. had been heading toward meeting one-day delivery requirements for its Prime service when the pandemic slowed its progress. Since the end of the pandemic, the company has regained its fast-delivery mojo. In response, the company said Monday that it plans to double the number of same-day delivery sites “in the coming years,” according to Doug Herrington, CEO of Worldwide Amazon Stores.
Herrington, who has held the role since July 2022, leads numerous businesses, including Amazon’s online and mobile shopping experiences worldwide, global operations, and fulfillment. The following appeared Monday as a blog post.
When we launched Prime in 2005, the first benefit we announced to members was free Two-Day Shipping (Jeff Bezos called it “all-you-can-eat express shipping”) on 1 million items — a revolutionary innovation at the time that transformed the way many of us shop, my family and me included. Today, Prime is much more expansive and much faster.
With more than 300 million items available with free Prime shipping and tens of millions of the most popular items available with free Same-Day or One-Day Delivery, we hit our fastest Prime speeds ever last quarter. Across the 60 largest U.S. metro areas, more than half of Prime member orders arrived the same or next day. So far this year, we’ve delivered more than 1.8 billion units to U.S. Prime members the same or next day — nearly four times what we delivered at those speeds by this point in 2019.
So how have we achieved our fastest delivery speeds on the broadest selection ever, and why do we expect to get even faster from here? Here’s a quick summary.
‘Regionalizing’ our US operations network
In short, we divided the country into smaller, easier-to-reach regions. Previously, we fulfilled orders from any of our operational sites across the country. Now we have eight interconnected regions serving smaller geographic areas. We keep a broad selection of inventory in each region, making it faster and less expensive to get those products to customers. Today, more than 76% of the orders we fulfill come from within the customer’s region. Items shipped from nearby fulfillment centers or delivery stations help packages get to customers not only faster but also with fewer emissions.
Placing products closer to customers
We use increasingly advanced machine learning algorithms to better predict which items customers in various parts of the country will want and when they will want them, and we work with our vendors and selling partners to store those products closer to customers. This helps to ensure that we have the right inventory in the right places at the right time. We’re also expanding our capacity to place products in the right fulfillment center in each region. This allows us to shorten replenishment times while maintaining the broadest selection of products available to fulfill customers’ entire order at one time from the Amazon location closest to them.
Growing our Same-Day Delivery network
Same-Day facilities are smaller buildings situated close to the large metro areas they serve, which decreases the distance to customers. These buildings are designed for speed, with smaller footprints, streamlined conveyors and picking directly to pack stations.
As a result, the average time from picking a customer’s items to positioning the customer’s package on the outbound dock is 11 minutes in Same-Day facilities, more than an hour faster than our traditional fulfillment centers. And these hybrid facilities allow us to fulfill, sort and deliver all from one site — making the entire process of delivering customer packages even faster.
Selection varies by city, as we regularly update our product offering based on what we’re seeing as top customer items purchased or based on seasonal demand in the area. And with connections to the larger Amazon fulfillment centers nearby, we dramatically increase the number of items available for fast delivery. Same-Day Delivery is currently available on millions of items for customers across more than 90 U.S. metro areas, and we have plans to double the number of sites in the coming years.
Compounding benefits
As we make these changes, we are seeing that they have the added benefit of reducing costs, too. Regionalizing our network reduces miles traveled and handoffs. Since the beginning of the year alone, the distance between our sites and our customers decreased by 15%, with 12% fewer touch points in our middle-mile network.
Improved product placement gets items even closer to customers, making our delivery system more efficient. And our Same-Day Delivery network is not only our fastest way to get products to customers, it is also one of our lowest-cost ways.
Lowering costs drives a better customer experience, because the lower our cost to serve customers gets, the more products our vendors and selling partners can make available in our store — meaning our selection keeps getting better for customers.
We are delivering faster speeds on a broader selection while also improving the overall safety of our employees. It’s easy to assume the faster we deliver, the faster employees work. That couldn’t be further from the truth. The speed improvements that we’re making come primarily from placing products closer to customers.
The people picking, packing and driving to your house are doing the same thing for orders that arrive the same or next day as orders that used to take two or three days. What’s changed is the product is traveling fewer miles and experiencing fewer handoffs between the time you place an order and the time it gets to your door.