Hoping to be the leader in last-mile delivery options for online consumers this holiday season, Amazon early Monday announced it has opened up its Prime-style shipping services to everyone.
The minimum amount shoppers were required to spend to receive free shipping from Amazon has fluctuated, from as high as $49 in February 2016 to $25 in May 2017 after spending a few months at $35.
The decision to give more consumers access to Prime’s main draw comes as its retail competitors, notably Walmart and Target, have made efforts to reduce Amazon’s market share.
In an effort to offer equivalent value to its Prime members, who saw their subscription price increase by nearly 20 percent in January, Amazon said it’s expanding the number of items available for free same-day shipping for Prime subscribers from 1 million to 3 million products. Meanwhile, the retailer also said its grocery delivery and pickup service is currently available to Prime members in 60 cities along with Prime Now shipping in 30 cities for one to two-hour deliveries—among other subscription benefits like audio and video streaming.
However, Amazon’s desire to offer non-Prime business could reflect growing pressure from competitors and slowing growth, by Amazon standards, in the third quarter: Q3 revenue of $56.6 billion fell short of Wall Street estimates, and the retailer’s Q4 guidance was also lower than expected. In Amazon’s quarterly earnings call last month, CFO Brian Olsavsky suggested investors should still expect a strong fourth quarter from the retailer.
“The warehouses are very clean. We feel like we’re going to have great capacity not only for retail products but also for FBA (Fulfillment by Amazon),” Olsavsky said. “We’re going to have great capacity for shipping to our customers. Selection should be at its highest point, especially for Prime members. We’re very bullish on the fourth quarter. And we’ll just have to see how revenue comes in.”
In October, Moody’s released a report suggesting traditional retailers have begun leveraging their brick-and-mortar capabilities in an effort to compete with Amazon’s e-commerce stranglehold. Amazon’s purchase of Whole Foods in August 2017 helped grow its physical assets, but competitors like Walmart and Target have a logistics advantage over Amazon, which relies on third-party deliveries to cross the “last mile” to the consumer’s doorstep.
Walmart, for its part, has expanded its e-commerce efforts to lure in additional third-party vendors. In August, Walmart began implementing a program it hopes will create a “consistent and easy experience” for all consumers shopping on its site, beginning with expanding its Returns Shipping Service to third-party sellers. The sheer ubiquity of Walmart stores gives it an advantage over Amazon when it comes to returns, a service which 68 percent of consumers prefer to use in-store, according to a recent UPS report.
Target last month announced free two-day shipping with no minimum for all orders placed between Nov. 1 and Dec. 22.
Amazon’s competitors will need all the help they can get. A holiday shopping report released in October found 80.1 percent of shoppers surveyed considered Amazon to be their top retail destination. The same study suggested Walmart will see 25 percent fewer shoppers, and Amazon would likely take in half of all annual online sales.