Amazon.com (AMZN 2.61%) created the two-day shipping standard. It then moved to one-day. Now, it's expanding its ability to offer same-day delivery in more markets.
To make that happen it's building new, smaller warehouses closer to large numbers of customers. These warehouses serve Amazon Prime members who live in densely populated cities.
Amazon has been increasing its same-day delivery markets. Image source: Getty Images.
What is Amazon doing?
The online retailer knows what items get ordered the most. It also has extensive data about which products sell in different markets. Jon Alexander, who leads the team charged with making Prime faster, explained the new warehouses in a blog post.
"We're able to do so by storing need-it-today items in brand new facilities we built even closer to customers," he wrote. "These are first-of-their-kind buildings and serve as mini-fulfillment centers optimized for faster click-to-delivery speeds."
Amazon, he added has about 3 million items in stock for same-day delivery.
Amazon fends off competitors
While Amazon has a big edge over web-based rivals, the same cannot be said of its chief brick-and-mortar competitors, Target (TGT +0.32%) and Walmart (WMT +0.45%). Both of those retailers can use their huge networks of stores as warehouses for same-day delivery and curbside order pickup.
This is an area where Amazon has to take a different approach since it does not have a network of stores ready to fill these orders. These new, smaller warehouses supplement bigger distribution centers, letting the company get its goods closer to the customers who plan to order them.
That's a smart strategy for Amazon. It's also a move that may help supply Amazon Go grocery or convenience stores, both of which may also help the company fulfill same-day orders.
