Amazon says more than 5 billion items now arrive the same day or next day—up more than 30 percent year-over-year. And it seems the online marketplace is dead set on expanding this number even further.
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According to a Wall Street Journal report, Amazon’s expansion of its one-to-two-day delivery capabilities is designed to further push the company into rural areas—a move that could mean fewer deliveries are handled by the U.S. Postal Service .
Expedited delivery is accelerating at Amazon. Udit Madan, vice president of Amazon Worldwide Operations, said in a Tuesday morning blog post that the e-commerce giant has expanded same-day delivery to more than 120 U.S. metro areas, a jump from the more than 110 areas the company touted on June 30.
This expansion involves opening smaller, optimized delivery centers closer to rural locations, using contracted drivers and partnering with small businesses for deliveries, the WSJ report said.
According to data from supply chain consulting firm MWPVL International, Amazon has 1,363 total facilities in the U.S. as of the 2024 first quarter, along with 170 warehouses expected to be opened in the future. Of the future facilities, 103 are expected to be delivery stations for packages, which are smaller, local distribution centers strategically positioned for last-mile delivery.
Amazon’s rural expansion includes small cities and towns in Arizona, Minnesota, Louisiana and Texas, the WSJ report said. A prior report from the publication in May indicated that Amazon had leased, bought or announced plans for over 16 million square feet of new warehouse space in the U.S. through the first five months of the year, and that the tech titan had been leasing smaller warehouses in the rural areas.
An Amazon spokesperson told Sourcing Journal the rural delivery stations help cut delivery times by 50 percent for customers in these less densely populated areas. These delivery stations are generally smaller in size and handle a lower volume than the stations in urban and suburban areas.
“We believe there are more opportunities ahead for us to continue delivering our wide selection of products even faster for our customers, regardless of location,” said Amazon spokesperson Sam Stephenson. “Expanding our rural delivery network will help cut delivery times for customers in smaller towns and more isolated parts of the country.”
The WSJ’s description of the expansion, with a focus on “contracted drivers and mom-and-pop shops,” evokes the experimental Amazon Hub Delivery program Amazon debuted last year. For that program, Amazon has been recruiting small businesses to deliver the company’s packages by paying them via a per-package fee. These mom-and-pops could deliver packages using their existing staff, vehicles and devices.
The company has also been building out its Amazon Shipping ground delivery service for shippers that don’t already sell products on Amazon. The service, which Amazon resurrected last year, competes directly with parcel delivery firms like UPS and FedEx.
According to the WSJ report, Amazon’s strategy is to reduce reliance on the USPS , which has been raising rates and limiting services as it continues to attempt a financial turnaround and address recent criticisms of its delivery speed.
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But Stephenson made it clear that the USPS “are valued partners” of Amazon despite the WSJ report, and that “assertions or speculation to the contrary are inaccurate.”
The report said Amazon isn’t trying to deliver to 100 percent of U.S. customers just yet. But it has set a target of roughly 90 percent. More than two-thirds of Amazon packages are delivered via Amazon’s own logistics network in the U.S., the company says.
The e-commerce giant has been delivering an increasing share of its own orders. As of last year, market research firm ShipMatrix said the USPS handled about 9 percent of Amazon’s packages, while UPS handled about 8 percent, both significantly down from 2019.
Amazon has been hyping the regionalization of its fulfillment network and its contribution to its “ fastest Prime delivery speeds ever” for more than a year now, noting that the company has constantly been able to shorten the distance of its deliveries.
Madan said in his Tuesday blog post that in the first half of 2024, Amazon cut the distance for items traveled between its U.S. sites and the customer by nearly 10 percent compared to the year prior.
The network expansion isn’t just about industrial real estate.
The May WSJ report indicated that Amazon is requiring itself and third-party merchants on its platform to hold inventory across multiple locations rather than in a few centralized places to support the regionalized approach.
Amazon credits advanced machine learning algorithms for better predicting regional demand and improving inventory placement.
“Through scaling this effort in the first half of the year, we increased the average number of items per box in the U.S. compared to the same period in 2023, which reduced the number of required deliveries for these items,” Amazon said Tuesday morning.
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