Amazon is set to increase shipping charges, with same-day service customers set to be the hardest hit, the website 247WallSt reported. The e-commerce giant has reportedly been losing money on the system, which allows customers to receive their orders within hours. According to The Wall Street Journal, traditional delivery costs for the “last mile” run now stands at $1.75, while same-day service costs for the same distance come to $3.30 per package.
Amazon is now faced with a dilemma, whether charge extra for the service and increase revenue or use it as a means to retain subscribers of its $139 a year Prime service even if that means incurring loss in the process. As it is, Amazon Prime service offers free delivery for some packages and access to Amazon Prime Video streaming service.
Despite the financial pressure, Amazon management insists that they are “always exploring ways to bring our customers new levels of convenience and delivery options that work best for them. Same-Day Delivery is one of the latest innovations.” Amazon has fulfillment centers in large cities to make the service available, but it has been cutting back on delivery points even though the same got a boost during the pandemic.
Andrew Jassy, Amazon’s CEO, faces the challenge of deciding how much to charge for same-day delivery without risking customer loyalty. The company’s investors have also been hit, with the stock falling by as much as 50 percent. While rivals like Walmart offer similar delivery systems, Amazon cannot afford to pull back too much without affecting consumer loyalty and recurring revenue.
With a keen interest in tech, I make it a point to keep myself updated on the latest developments in technology and gadgets. That includes smartphones or tablet devices but stretches to even AI and self-driven automobiles, the latter being my latest fad.