Amazon has been experimenting with same-day delivery in major urban areas for a while now, in most cases requiring that orders be placed by noon to ultimately be delivered before 9 p.m. This new variation allows for more flexibility on delivery time and turbo-charges the speed at which Amazon is promising to bring orders to customers.
The announcement also makes clear what Amazon is doing with its space on 34th Street in Manhattan, which some had speculated was to be its first brick-and-mortar store. The company says a portion of that building will be the delivery hub for Prime Now orders.
There is no shortage of companies jockeying with Amazon for same-day delivery supremacy: Google is reportedly prepared to plow $500 million into its Google Express offering. Start-ups such as Postmates, Instacart and Deliv are also gaining traction.
All of these business are fighting hard to be the dominant player in a service that is extraordinarily hard to do profitably. This, in part, is why dot-com era efforts such as Webvan and Kozmo collapsed. It may also explain why eBay appears to have scaled back its ambitions for its own same-day delivery effort, eBay Now. EBay once promised to offer its same-day option in five to 25 cities by the end of the year, but that expansion never happened. Instead, the company is now focused on building its eBay Local offering, a delivery and in-store pickup program for small businesses.
But profitability may not be a top concern for Amazon, a company that has proven again and again that it’s willing to take a loss on something that it believes will enrich its overall shopping experience and cultivate customer loyalty. (Jeffrey P. Bezos, the chief executive of Amazon, owns The Washington Post.)
Prime Now seems to bank on the notion that there's consumer appetite for near-instant gratification on certain kinds of online purchases. But all of these same-day delivery rivals are in the early innings of a long ballgame, and it remains to be seen whether what customers are really after with same-day delivery is raw speed or convenience and flexibility.
For example, when Deliv chief executive Daphne Carmeli founded her same-day business, she says, she bought up a trove of URLs with the words "1-hour" or "60-minute" in them, thinking that speed was going to be critical. But as the service grew, she found most shoppers weren't using it that way: They were scheduling deliveries for later in the evening when they were home from work, or for the free hour they had between yoga class and a dinner date.
Still, Amazon and Deliv are focused on delivering different kinds of goods. Deliv partners with malls, so many of its packages contain apparel, small electronics and home goods. Amazon, meanwhile, is aiming to bring you "daily essentials," such as paper towels, batteries or diapers. Maybe speed is more important for a shopper who has just run out of shampoo than a shopper who just snapped up a cashmere sweater.
As same-day delivery expands to more markets, these companies will likely get more clarity on exactly what their value is to consumers.
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