Amazon CEO Andy Jassy shared how the American giant retailer is able to make its same-day delivery service successful. In the old days, consumers needed to wait for days before their parcels could arrive at their doorsteps.
In 2015, Amazon introduced the same-day delivery service to Prime Members to change this situation and allow Americans to get their orders as soon as possible.
Amazon CEO Andy Jassy speaks during the New York Times DealBook Summit in the Appel Room at the Jazz At Lincoln Center on November 30, 2022 in New York City. The New York Times held its first in person DealBook Summit since the start of the coronavirus (COVID-19) pandemic.
For the past few years, Amazon's same-day delivery service has expanded to major cities. With its efforts, the e-commerce giant was able to increasingly carry out same-day deliveries.
Amazon CEO Shares Secret To Successful Same-Day Delivery Service
According to CNBC's latest report, Amazon CEO Andy Jassy shared the retailer's secret when it comes to making its same-day service a success.
He said that Amazon changed its U.S. fulfillment network from a flat regional network to eight regional hubs. Aside from this, the retailer also made efforts to reconfigure its placement algorithms to get items closer to customers.
Jassy further stated that Amazon relies on sub-same-day facilities as well to ship orders faster; claiming that the company's fulfillment centers have around a million SKUs (stock-keeping units), which are product identifiers used by retailers.
Andy Jassy said that all these efforts allowed Amazon to reduce the delivery distances without increasing the costs they charge consumers.
"We were not only able to take the transportation distances down, which lowers your transportation costs and speeds up delivery to customers, but we also took our cost to serve down," said the Amazon leader.
"We moved from two to a lot of the shipments being one day, and then increasingly, we're being able to ship items to people in the same day," he added.
Importance of Same-Day Deliveries To Amazon
Products are seen on a conveyor belt at an Amazon fulfillment center where they are being sorted and shipped out as same day orders during Cyber Monday at the Same-Day Delivery Facility Fulfillment Center on November 27, 2023 in Tampa, Florida.
Fortune reported that same-day deliveries and other speedy delivery services remain a major imperative for Amazon.
Since fast deliveries are so critical to the retailer, it completed over half of all orders placed by Prime subscribers in the 60 largest metropolitan areas. Around 60% of these deliveries have been same-day or one-day shipments.
Amazon explained that fast deliveries have changed customers' conversion rates, as well as the rate at which they are willing to purchase.
"What you find downstream for customers is when you're able to get them delivery much faster, they consider you for much more of their purchases," said Andy Jassy.
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