Need a last-minute birthday gift but don’t have time to go to the store? No problem. Amazon will deliver it the same day you order it.
As of late last week, Amazon Prime members in the Phoenix area and 13 other markets now have access to same-day delivery with a minimum $35 purchase ordered by noon. And it’s also free to those members. Amazon officials say there are also no plans to raise the $99 annual Prime membership cost.
"Amazon is trying to accumulate as many customers as possible because it’s widely known that, while they have huge volumes of sales, they’re not making any serious money yet,” said Robert Mittelstaedt, the retired dean of Arizona State University’s W.P. Carey School of Business.
He said free, or close to free, is one of the only ways something such as this can really take off and become mainstream. Unfortunately, that’s just not a sustainable long-term business model, he said.
“Even though they have a very large number of people paying that ($99) a year fee, that probably doesn’t even equal the cost of all the free shipping that they’re doing for people,” Mittelstaedt said. “At some point they have to cover the costs of the service they’re providing. It’s also not clear to me once they start doing that people are going to say that they really need something within two hours.”
He said it’s also a logistical nightmare for retailers, even for Amazon, because some neighborhoods are too far from distribution warehouses or too hard for delivery trucks to get to fast enough. That’s partly why the service, at least for now, is available in only certain areas around the Valley.
