Amazon changing deliveries to cut shipping times

Amazon is revamping its delivery operations to cut costs while speeding up shipping times to the next day or sooner.

Amazon has traditionally operated one national delivery network that distributed orders from warehouses nationwide.

If a local warehouse didn’t have the product a customer ordered in Detroit, Amazon would ship it from another part of the country. But long-distance shipping has been costlier for the company and led to increased customer delivery times.

Amazon CEO Andy Jassy has said it is a “critical challenge” for the company to lower the cost of getting products from Amazon’s warehouses to customers. 

So in pursuit of boosting its profitability, the company has created eight regions in smaller geographic areas designed to ship products over shorter distances.

“Each of these regions has a broad, relevant selection to operate in a largely self-sufficient way while still being able to ship nationally when necessary,” Jassy said in an April letter to shareholders.

The changes may impact which products consumers see when they search for products on Amazon’s website. For example, Amazon said items closer to customers would appear higher on results pages.

The Wall Street Journal first reported these changes.

Jassy said the company saw more next-day and same-day deliveries, and Amazon was on track to have its fastest Prime delivery speeds in 2023.

But it still needs to be clear how crucial same-day delivery is to customers. Several fast-delivery startups have cropped up to deliver customers’ grocery and convenience-store orders within 30 minutes, but many failed.

Amazon has “convinced themselves people want one-day delivery,” Michael Pachter, a retail analyst at Wedbush Securities, said in an email to CNN. “I needed Gorgonzola cheese for a recipe Saturday, [so I] went to the store. I don’t need same day or next day delivery for most things,” he wrote.

The more immediate benefit for Amazon may be cutting costs.

After expanding rapidly during the pandemic, the e-commerce giant cut some 27,000 jobs as part of a significant bid to rein costs in recent months.

Amazon also began charging some customers a $1 fee if they return items to a UPS store when there is a Whole Foods, Amazon Fresh grocery store, or Kohl’s closer to their delivery address. (Amazon owns Whole Foods and Fresh and has a partnership with Kohl’s.)

Amazon also recently started adding a “frequently returned” badge on specific products on its website for customers.

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