Dive Brief:
- Amazon reached its "fastest Prime speeds ever last quarter," Doug Herrington, CEO of Worldwide Amazon Stores, said in an announcement Monday.
- During the company's second quarter, which ended June 30, more than half of Amazon Prime member orders in the 60 largest U.S. metro areas arrived either the same day or next day.
- Herrington credited three initiatives with helping the company accelerate delivery speeds: regionalizing Amazon's U.S. operations network, placing products closer to customers via machine learning algorithms and using a growing roster of same-day delivery facilities.
Dive Insight:
While Amazon has worked to reduce costs in its sprawling fulfillment network, the company continues to prioritize an expanded one-day delivery offering. Herrington supported that push in Monday's announcement.
"If we continue to invest in improving delivery speeds and an ever-growing product selection, customers will continue to choose Amazon and Prime," he said.
Amazon revealed one of its investments in delivery speeds earlier this year, when President and CEO Andy Jassy said the company recently shifted from a national fulfillment network to a regionalized model. Instead of fulfilling orders from any site in the U.S., the company now operates eight interconnected regions that serve smaller geographic areas, allowing for faster and less expensive deliveries.
"Today, more than 76% of the orders we fulfill come from within the customer’s region," Herrington said in Monday's announcement. "Items shipped from nearby fulfillment centers or delivery stations helps packages get to customers not only faster, but also with fewer emissions."
To determine what inventory should be available at which facilities, Amazon uses advanced machine learning algorithms to predict demand, Herrington said. He added that the company is expanding its capacity to place products in the appropriate fulfillment center in each region, shortening replenishment times while keeping a wide range of products available at various locations.
Amazon plans to double the number of its same-day delivery sites in the coming years, according to Herrington. These facilities are "designed for speed," he said — the sites are located near the metro areas they serve, with smaller footprints and a streamlined fulfillment process.
"As a result, the average time from picking a customer’s items to positioning the customer’s package on the outbound dock is 11 minutes in Same-Day facilities, more than an hour faster than our traditional fulfillment centers," Herrington said.
