Amazon Offers Free Same-Day Delivery for Prime Members

Amazon.com Inc. will offer free same-day delivery to Amazon Prime subscribers in 14 metropolitan areas, putting 1 in 6 Americans within reach of the online retailer’s speedy service that provides a time-saving alternative to a trip to the store.

Prime members, who pay $99 a year for delivery discounts, video streaming and other services, previously had to pay $5.99 for same-day delivery. Now the service is free for orders of more than $35 placed before noon from a selection of more than 1 million products, including ear thermometers, laptop chargers and garden gnomes.

“This lets people get back to doing what they want to do instead of running errands,” Amazon Vice President Greg Greeley said in an interview. “We’ve been looking for ways to enhance the Prime customer experience ever since we started it in 2005, and this is one more step in that evolution.”

Amazon is trying to set the standard for speed in the e-commerce industry. Online sales are expected to increase 14 percent to $349 billion in the U.S. this year, according to EMarketer.

As sales continue to shift from brick-and-mortar stores to smartphones and laptops, some Amazon competitors are looking to mimic the delivery subscription model the Seattle-based e-tailer pioneered 10 years ago by offering free two-day delivery on 1 million items.

Startup Jet.com began in March, offering delivery of 10 million goods for $50 a year to a select group of customers. Wal-Mart Stores Inc., the world’s biggest retailer, earlier this month announced plans to give online customers unlimited free shipping for $50 a year. And several delivery startups are offering retailers same-day options.

More Cities

Amazon also announced Thursday that it’s offering same-day delivery in San Diego and Tampa Bay, Florida, bringing it to a total of 14 metropolitan areas that are home to 50 million people. Other areas served include New York, Los Angeles, Philadelphia, Phoenix and Boston.

Amazon doesn’t disclose how many people subscribe to Prime membership. Macquarie Research analyst Ben Schachter estimated in April that Amazon has at least 35 million Prime members and that approximately 50 percent of U.S. households will have a membership by 2020.

By providing free same-day delivery, Amazon will continue to take market share away from brick-and-mortar retailers, said Michael Pachter, analyst at Wedbush Securities in Los Angeles.

“It won’t be huge, but it will be single digit percentage market share in a bunch of categories, and physical retailers will have trouble matching,” he said.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE