Amazon announced on Thursday it will be making one-day shipping the standard for all Amazon Prime members, expecting to spend $800 million during the second quarter of this year to improve its warehouses and delivery infrastructure.
Although not explicitly said outright, the move by Amazon did raise the bar for the e-commerce giant’s competitors, chiefly Walmart and Target to offer faster and cheaper shipping for online purchases. And Walmart was quick to respond.
“One-day free shipping…without a membership fee. Now THAT would be groundbreaking. Stay tuned,” tweeted the retail giant yesterday after the market close.
One-day free shipping…without a membership fee. Now THAT would be groundbreaking. Stay tuned.
— Walmart (@Walmart) April 26, 2019
Not such a bad idea
Could one-day free shipping without having to pay a membership fee work? “One-day shipping is neither shocking nor difficult for retailers at scale,” Brandon Fletcher, an analyst at Sanford Bernstein, said in a note Friday. Fletcher used to work for Walmart in its strategy and operations departments.
Fletcher points out that with the company’s network of 156 distribution centers – along with the fact that they are located close to or in urban areas where most of the population resides, makes it feasible. It wouldn’t require that much of an investment to build out a one-day service.
He cited previous research by consultants A.T. Kearney that showed Walmart could get to one-day deliveries by adding only eight more distribution facilities, reports the Financial Express.
Seeking Alpha notes that if Walmart is willing to go to one-day delivery like its rival, Amazon, just think of the pressure this would put on other large retailers, like Macy’s, Nordstrom, Best Buy, Office Depot, and Dick’s Sporting Goods, not to forget Target.
It will be interesting to see what happens over the next few weeks. According to DynamicAction, an analytics firm, retail transactions with free shipping increased about 13 percent in North America last year and rose 8 percent through April 15 of this year. So the demand is there for one-day shipping.
