February 18, 2015
Amazon Prime members* get free deliveries in two hours
If you’re an Amazon Prime member and you live anywhere on the island of Manhattan*, you’ve gotten an upgrade. According to reports, Amazon Prime members will no longer have to wait two days to get their orders delivered for free. Now, eligible items will be delivered to the doorsteps (or stoops) of New Yorkers within two hours at no charge.
Back in December, Amazon announced the launch of Prime Now, a mobile app and service that enabled members within the 10001 zip code to place orders for any of 25,000+ items and receive them inside of one hour. The charge was $7.99, or absolutely free if they were willing to wait two hours. Amazon’s delivery hours were from 6 a.m. to 12 a.m.
In a RetailWire discussion on the initial launch of Prime Now, numerous commentators questioned whether the program made financial sense. Some called it a gimmick and questioned whether the program would survive beyond the holiday season. While no one outside of Amazon knows the numbers, the expansion of the program to all of Manhattan suggests the e-tailer is finding some value in the exercise.
While one-hour delivery is currently only available in Manhattan, Amazon is offering two-hour deliveries in some sections of Brooklyn, as well. Amazon plans to expand Prime Now to other urban markets in the near future, although it has yet to name where it will go next.
BrainTrust
Recent Discussions
Discussion Questions
Has the expansion of Prime Now to all of Manhattan made you rethink your initial views of the program? What will the borough-wide rollout of Prime Now mean for Amazon’s retail competitors in Manhattan?
Poll
This is fantastic for consumers and will cause non-subscribers to reconsider Prime. I question how free two-hour delivery will impact Amazon’s bottom line. With this move Amazon has thrown down the gauntlet to all e-commerce players, as well as local brick-and-mortar stores. Why shop and schlep when Amazon can deliver it to you in two hours?
Whenever I travel to Manhattan, I am amazed at the density of people and traffic. Getting from point A to point B is quite the effort, but also presents opportunities. Any time you can eliminate trips to the store, redefine impulse buying and can add convenience of fast front door (stoop) delivery within a credible and defined program like Amazon Prime, then that is a very good thing!
Amazon’s move in Manhattan combines the scale of that company with a very local/neighborhood delivery mindset. Maybe this is Amazon’s version of “glocal” and points the way forward.
Not necessarily, Amazon loses money on lots of projects and keeps lots of its “tests” going way longer than it should.
The roll-out ought to hurt companies directly competing with Amazon, but there’s another question that the article doesn’t discuss that’s equally intriguing.
How come I pay the same thing for a Prime membership as a New Yorker does but get less service? Shouldn’t all Prime members outside of NYC get a rebate?
Just askin’.
I’ve been a fan of the Amazon Prime program since I joined it a number of years ago. As for the new two-hour service, I love it when companies I do business with up their customer service. Can’t wait for this to come to St. Louis!
Amazon has a long tradition of setting the bar for convenience, selection and price. In this case, they’re under increasing pressure from third parties like Deliv, Instacart, Postmates, Google Express and others.
The near-term economics don’t matter much. Amazon will have modeled scenarios for scale, efficiency and impact on lifetime customer value. If they believe this is the right decision for the long-term, they’ll have more patience waiting for payback on the investment than most of their competitors.
And if it shows signs of promise, they’ll expand steadily and selectively.
If items I really need within that hour or two hour window are the ones available for quick delivery, I would be willing to pay for the service or choose Amazon over a competitor. However, if I do not need the products that quickly, why pay extra for the service? Without knowing the numbers in terms of usage and cost it is difficult to tell if this is a competitive advantage.
I wonder how Amazon’s price algorithm works in conjunction with need of immediate delivery—are these prices higher? It is well documented that Amazon makes millions of price changes daily and I am curious as to whether the need for instant delivery allows for a higher price to be charged.
Home delivery makes a great deal of sense and money when operated efficiently in high-density areas of affluence. Accordingly, NYC is densely populated to the point that Prime Now should work rather well through the boroughs.
The challenge of expanding the business will be executing in less populated areas that require sharper logistics to profitably deliver an item within hours, not days. Drone technology and even crowd-sourcing may provide some answers for more sparsely populated areas of the country. My money is on Amazon figuring it out first.
Wow, that’s fantastic—unless it’s like my Prime membership which promises 2 day delivery but can’t seem to manage that on a consistent basis. Unless Amazon executes this better than their current Prime program, they will make more enemies than friends. Things seem to work when Bezos has his eye on the ball, but when new projects start developing, service tends to get weak.
As a 2-year veteran of the Prime program, but one who’s NOT living in Manhattan, what’s in it for me?
And there’s a bit of an ethical issue here, as well, with Amazon providing what are essentially tiered service levels to members paying the same fee, based entirely on what’s convenient for their current infrastructure.
“While no one outside of Amazon knows the numbers, the expansion of the program to all of Manhattan suggests the e-tailer is finding some value in the exercise.”
I disagree: the first clause of this sentence makes any kind of “suggestion” a “read into it what you want to” exercise. But I wish them well…I guess.
Great for the customer but again, “SHOW ME THE MONEY!”
And, more than my 2 cents
Prime Now in Manhattan is a great idea to gain Prime subscribers and beat the competition.
Robert brings up a good point: how will Amazon’s dynamic pricing model fit in with all of this? I imagine prices for two hour delivery will be the same as regular delivery to avoid an uproar, but this would definitely be interesting to keep track of. Unless Amazon can really up its Prime subscribers and get them to order more, it seems like the company will certainly be losing money on this program—especially if pricing is equal.
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This is fantastic for consumers and will cause non-subscribers to reconsider Prime. I question how free two-hour delivery will impact Amazon’s bottom line. With this move Amazon has thrown down the gauntlet to all e-commerce players, as well as local brick-and-mortar stores. Why shop and schlep when Amazon can deliver it to you in two hours?
Whenever I travel to Manhattan, I am amazed at the density of people and traffic. Getting from point A to point B is quite the effort, but also presents opportunities. Any time you can eliminate trips to the store, redefine impulse buying and can add convenience of fast front door (stoop) delivery within a credible and defined program like Amazon Prime, then that is a very good thing!
Amazon’s move in Manhattan combines the scale of that company with a very local/neighborhood delivery mindset. Maybe this is Amazon’s version of “glocal” and points the way forward.
Not necessarily, Amazon loses money on lots of projects and keeps lots of its “tests” going way longer than it should.
The roll-out ought to hurt companies directly competing with Amazon, but there’s another question that the article doesn’t discuss that’s equally intriguing.
How come I pay the same thing for a Prime membership as a New Yorker does but get less service? Shouldn’t all Prime members outside of NYC get a rebate?
Just askin’.
I’ve been a fan of the Amazon Prime program since I joined it a number of years ago. As for the new two-hour service, I love it when companies I do business with up their customer service. Can’t wait for this to come to St. Louis!
Amazon has a long tradition of setting the bar for convenience, selection and price. In this case, they’re under increasing pressure from third parties like Deliv, Instacart, Postmates, Google Express and others.
The near-term economics don’t matter much. Amazon will have modeled scenarios for scale, efficiency and impact on lifetime customer value. If they believe this is the right decision for the long-term, they’ll have more patience waiting for payback on the investment than most of their competitors.
And if it shows signs of promise, they’ll expand steadily and selectively.
If items I really need within that hour or two hour window are the ones available for quick delivery, I would be willing to pay for the service or choose Amazon over a competitor. However, if I do not need the products that quickly, why pay extra for the service? Without knowing the numbers in terms of usage and cost it is difficult to tell if this is a competitive advantage.
I wonder how Amazon’s price algorithm works in conjunction with need of immediate delivery—are these prices higher? It is well documented that Amazon makes millions of price changes daily and I am curious as to whether the need for instant delivery allows for a higher price to be charged.
Home delivery makes a great deal of sense and money when operated efficiently in high-density areas of affluence. Accordingly, NYC is densely populated to the point that Prime Now should work rather well through the boroughs.
The challenge of expanding the business will be executing in less populated areas that require sharper logistics to profitably deliver an item within hours, not days. Drone technology and even crowd-sourcing may provide some answers for more sparsely populated areas of the country. My money is on Amazon figuring it out first.
Wow, that’s fantastic—unless it’s like my Prime membership which promises 2 day delivery but can’t seem to manage that on a consistent basis. Unless Amazon executes this better than their current Prime program, they will make more enemies than friends. Things seem to work when Bezos has his eye on the ball, but when new projects start developing, service tends to get weak.
As a 2-year veteran of the Prime program, but one who’s NOT living in Manhattan, what’s in it for me?
And there’s a bit of an ethical issue here, as well, with Amazon providing what are essentially tiered service levels to members paying the same fee, based entirely on what’s convenient for their current infrastructure.
“While no one outside of Amazon knows the numbers, the expansion of the program to all of Manhattan suggests the e-tailer is finding some value in the exercise.”
I disagree: the first clause of this sentence makes any kind of “suggestion” a “read into it what you want to” exercise. But I wish them well…I guess.
Great for the customer but again, “SHOW ME THE MONEY!”
And, more than my 2 cents
Prime Now in Manhattan is a great idea to gain Prime subscribers and beat the competition.
Robert brings up a good point: how will Amazon’s dynamic pricing model fit in with all of this? I imagine prices for two hour delivery will be the same as regular delivery to avoid an uproar, but this would definitely be interesting to keep track of. Unless Amazon can really up its Prime subscribers and get them to order more, it seems like the company will certainly be losing money on this program—especially if pricing is equal.