Amazon investing in same-day delivery, smaller fulfillment sites

Amazon charges Prime customers a $2.99 fee for same-day delivery if their order fails to meet a $25 order minimum.
The Amazon logo on a building.
  • Amazon is focused on expanding same-day delivery, according to WSJ.
  • The report said Amazon could soon open as many as 150 smaller fulfillment centers focused on it.
  • Same-day delivery costs customers a $2.99 fee on orders under $25.  

Amazon is focused on growing its same-day delivery efforts to better compete with competitors like Walmart and Instacart, according to a new report.

The Wall Street Journal on Feb. 26 reported that Amazon was expanding its same-day delivery options. Amazon furnishes same-day deliveries differently than its other Prime deliveries, which typically take about two days to arrive. 

According to the report, Amazon’s same-day deliveries are furnished with the help of warehouses it calls same-day sites. These sites are much smaller than Amazon’s typical fulfillment centers and are designed to affiliate speedy deliveries. 

The e-commerce giant has opened more than three dozen of these smaller fulfillment centers over the past four years, according to the report, which cited data from supply chain consulting firm MWPVL International. MWPVL says Amazon could reach about 150 of these smaller warehouses over the next several years, the report said. 

Amazon, which did not return Retail Leader’s request for comment, places these facilities near larger cities and stocks around 100,000 of the most popular items on its marketplace, according to MWPVL. The e-commerce retailer recently opened such facilities in cities that include Los Angeles, San Francisco and Phoenix, the report said.

Same-day delivery is available to Prime customers in select markets. It costs an additional $2.99 if customers fail to meet the $25 free delivery threshold. The company during its fourth-quarter earnings call highlighted its work in the same-day delivery space, noting that it had recently made the service faster in Los Angeles, San Francisco, Sacramento, California, Phoenix and Portland, Oregon. Amazon also said same-day delivery was available to customers in Belgium.

The move comes as Amazon shifts priorities. The retailer announced earlier this month that it would pause its expansion in the brick-and-mortar grocery space, even closing underperforming Amazon Fresh and Amazon Go stores. The company, which also owns Whole Foods Market, however, says it’s committed to physical retail, even after shuttering most of its brick-and-mortar concepts last year. In February, it opened another suburban Amazon Go c-store in Washington state.