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Marketplace

Amazon sacrifices profits for faster shipping

Sabri Ben-Achour Oct 25, 2019
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Two-day shipping used to be Amazon's signature. Now, its competitors offer the same.
Justin Sullivan/Getty Images

Amazon has offered two-day shipping to Prime members for nearly a decade now.

But this year, the company’s expected to spend around $3.5 billion to expand same-day shipping, according to Youssef Squali, lead internet analyst at SunTrust Robinson Humphrey.

It’s spent nearly half that amount already — so much that its third-quarter profits were down 27% from the same time a year ago.

Why the emphasis on shipping? Because Amazon’s defining offer of 2-day shipping isn’t so defining anymore. Walmart, Target and drugstores have caught up. So Amazon is upping the ante, moving to same-day shipping.

It’s an expensive move that it hopes its competitors won’t be able to match.

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