All this while, for the last 14 years, if you were an Amazon Prime customer, you were eligible to get a two-day delivery at your doorstep for any online order. Amazon decided to raise the stakes, even more, when it said that they revealed that they were upgrading the service for its Prime customers to a 1-day delivery facility. This immediately raised the stakes for its competitors- Target and Walmart as their stocks tumbled significantly immediately.
On Thursday, the biggest e-commerce company Amazon made this announcement of its plan of 1-day delivery and is expected to make investments close to $800 million in order to improve the infrastructure and warehouses facilities. The shares of Walmart fell by 2% and for Target; the loss in stocks was around 6%. Amazon, in contrast, rose by 2.5%.
Amazon has more than 100 million Prime customers all around the country with an outreach to close to 50% of the American homes. Since they have decided to make their delivery process even speedier, they are definitely going to add more members soon. The rivals will have to do something similarly substantial in order to compete, experts believe. People have become so accustomed to the two-day delivery itself that 40 percent of the people want only that. Moreover, 29 percent of customers have canceled orders because the two-day delivery wasn’t free.
Walmart made changes in its free delivery policy when it brought down the minimum value order from $50 to $35. They also brought a company called Jet.com at $3 billion in order to be able to reach more number of destinations in a shorter period of time. Target made more recent changes in 2018 itself when they announced free two-day delivery for credit card holders and for a minimum of $35 for non-Target customers. Now, they have to upgrade along the lines of one-day delivery soon to remain in the competition.