Amazon 1-day shipping could have big impact on retail competitors, ad spending

During Amazon’s Q1 earnings call earlier this year, CFO Brian T. Olsavsky announced that the company would be “evolving” two-day free shipping for Prime members to one-day shipping. He added that Amazon would spend $800 million to do so, although now it’s probably going to cost more.

One-day shipping = $24 billion in revenue. According to a research note earlier this week, RBC analyst Mark Mahaney projected that one-day shipping would increase adoption of Prime memberships and boost purchasing by existing Prime members. He argued that could in turn grow Amazon’s annual revenue by $24 billion. 

Let’s assume Mahaney’s logic and projections are correct: one-day shipping would grow Prime memberships and spending at Amazon. The impact on the broader market could be significant in at least two ways:

  • Other (traditional) retailers would potentially suffer.
  • Ad spending on Amazon will grow and possibly accelerate.

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