Amazon.com Inc plans to deliver packages to members of its loyalty club Prime in just one day, instead of two days, part of a spending ramp-up that will up the ante for retail rivals such as Walmart Inc.
Amazon expects to spend $800 million toward the shipping goal in the second quarter alone.
The announcement came after the online retailer Thursday reported first-quarter profit, demonstrating the company’s focus on cloud-computing, advertising, and other high-margin businesses continues to pay off.
“There’s a lot of error bars around this program, especially from the cost side,” Amazon’s Chief Financial Officer Brian Olsavsky told analysts on a conference call. “We (are) again, trying to take advantage of the fulfillment capacity and transportation capacity, especially with third-party partners, that we have.”
While Olsavsky did not provide a concrete timeline for the program’s rollout, he said, “We expect to make steady progress quickly and through the year.”
U.S. rivals Walmart and Target Corp have steadily rolled out two-day shipping, albeit on far fewer items than Amazon Prime customers can get at that speed for $119 a year in the United States. Olsavsky said the “vast majority” of Amazon’s selection is available in two days, and the company has already expanded the number of goods eligible for same-day and two-hour delivery.
In the first quarter, revenue from Amazon.com's seller services jumped 20 percent to $11.1 billion, while ad and other sales surged 34 percent to $2.7 billion.
Meanwhile, Amazon’s cloud unit known as AWS that sells data storage and computing services to enterprises, saw operating income grow 59 percent to $2.2 billion.
Sales in Amazon’s “other” segment, which is mostly advertising, increased 34 percent, to 2.72 billion. The company’s digital advertising franchise has grown into the third largest in the U.S., trailing only Alphabet Inc.’s Google and Facebook Inc.
While revenue growth slowed, profit surged to $3.6 billion in the first quarter.
The company forecast net sales of between $59.5 billion and $63.5 billion for the second quarter.