Amazon Announces Prime 1-Day Delivery. Still Don’t Think Speed and Convenience of Delivery is Important?

April 30, 2019 by Buck Devashish

Amazon Announces 1-day Delivery

The e-commerce portion of overall retail sales continues to grow and accounted for more than half of all retail sales growth in 2018. Guess who sold the most online? It should be obvious by now: Amazon. Amazon sold roughly $258.22 billion in US retail sales in 2018, which works out to roughly half of all online retail spend in the country. Is Amazon stopping to smell the roses? Heck no. In fact, they are stepping on the gas.

This week the e-commerce giant announced that they will offer 1-day delivery – at a cost of $800 million – to all Prime members and will make it the standard delivery option in 2019. How did the market respond to this? Well, within 24 hours Amazon’s stock closed up 2.5% while Target shares closed down roughly 6% and Walmart’s decreased by 2%. Point made.

For successful commerce today, it’s not just about product, price, and brand anymore. Given the rise of e-commerce, speed and convenience of delivery is now critical differentiator for retailers and deciding factor for consumers (esp. Millennials). Millennials are now the largest demographic cohort totaling 92 million. That’s almost 20 percent larger than the Baby Boomers and a whopping 50 percent larger than Generation X. Because of Millennials’ desire for speed and convenience – heck they’ve grown up with apps at their fingertips such as Uber and DoorDash – it’s also about improving the delivery experience, i.e., how fast and convenient can the customer receive their order and enjoy the benefits of their purchase. It’s the critical last step of the e-commerce journey. But it also factors in even before the online sale is made.

Amazon is the best at understanding this, originally with Prime. Prime members covert to a sale a whopping 70%+ of the time, while a non-Prime Amazon shopper converts at 14%. A typical e-commerce site converts a sale at measly 3% of their total online shoppers. Amazon has also tested in-house and in-trunk deliveries for ultimate convenience.

For other retailers to survive extinction, they need the speed of delivery to match that of Amazon (i.e., 2-day delivery across the US and one or same-day delivery for local markets) and test convenience options that are best for their target market (e.g., with last-mile, same-day options, BOPIS, click-and-collect, etc.). In fact, customers will even pay more for it. In a recent MetaPack survey, 70 percent of online consumers are prepared to pay extra to ensure speed and convenience, such as one-hour, same-day or Sunday delivery.

To enable this rapidly, new advances in technology approaches such as headless commerce architectures are replacing traditionally siloed and monolithic technologies and platforms. At its highest level, headless commerce involves the creation of functional microservices where application programming interfaces (APIs) provide the necessary functional intelligence across the customer journey, but with the intelligence, depth, and scale required to support the New Retail experience. A majority of retailers are either in the middle of a full-scale re-architecture using this approach or are looking at specific areas of their e-commerce journey to upgrade.

At Yantriks, we help retailers embrace this new paradigm of speed and convenience and the headless e-commerce technology architecture to make it a reality, beginning with inventory, availability, and fulfillment optimization capabilities. To learn more about headless commerce and how to support New Retail concepts, read our new white paper written by Chris Walton at Red Archer Retail.

One thing is certain. Time is of the essence. Amazon is moving fast and so should other retailers if they want to survive.