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Is The Sky The Limit For Amazon Prime Now?

Amazon is taking the next step in expanding its Prime Now same-day delivery service, officially launching an e-Commerce site to pair with its mobile presence. The web site will function similarly to the mobile site, giving Amazon members the ability to place orders on items that can be delivered within one or two hours.

The expansion of the service, which specializes in sales of food, groceries, health, beauty and household products and is offered in more than two dozen U.S. cities, further indicates Amazon’s intentions of increasing its focus on Prime Now going forward.

Although Amazon is making a serious play in the on-demand delivery space, its continued expansion into new markets (and potentially new merchandise offerings) will only go as far as the company’s infrastructure and data analysis can take it, according to supply chain and shipping expert Tom Caporaso.

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“Infrastructure remains a big piece of the Amazon strategy, as the company continues to build up distribution centers,” said Caporaso, CEO of Clarus Commerce, the parent company of destination shopping portal FreeShipping.com. “From a data perspective, it’s more about the SKUs and the items that people are buying that will lead them to expand that portfolio. What they’ve done well in the past is dabble in certain things, get a read from their consumers and then really invest in those businesses. They use the data and ultimately make bets based on what the data’s telling them.”

Slow And Methodical Is The Route Of Choice

One aspect Amazon has on its side with its expansion of Prime Now is time. While same-day delivery is continuing to become more of a reality, only 29% of U.S. online shoppers have actually shown interest in it — and most wouldn’t pay extra for it, according to data from Forrester Research. Thus, Amazon has been careful in the selection process of its expansion rollouts, seeking to avoid any potential speed bumps.  

“They’re very disciplined in terms of how they expand and invest in other business lines,” Caporaso said in an interview with Retail TouchPoints. “They’re not going to do anything that’s rash, and they’re not going to do anything that isn’t already supported by data and opportunity. The number of markets will continue to ramp up if they continue to get better distribution and better logistics systems, but they’re ultimately going to let the information they’re getting monitor and modulate that.”

Hold Off On Apparel And High Ticket Items…For Now

The day Amazon figures out how to effectively expand its Prime Now product offerings will be one retailers will have to prepare for, but fortunately for them, this doesn’t seem as if it will be the case any time soon. This means retailers can rest easy knowing that Amazon won’t be delivering consumers new jeans just yet.

“When you think about bigger price items or apparel, you’re going to see less need for one-hour delivery,” Caporaso stated. “The items that they have today around food and groceries, health and beauty, are right in that sweet spot of that hour or two where it’s a necessity. Will they test? I absolutely think they will start to test a broader arrangement, but I think they’ve hit the SKUs or the categories that make the most sense right now for this type of delivery.”

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