Amazon said it will spend $800 million on making one-day shipping a norm
Amazon (AMZN) mentioned on its earnings call last month that it will be spending $800 million in the current quarter to make one-day shipments to its Prime members a standard rather than an exception in the US. According to a report by the Verge, the e-commerce giant has already started rolling out the free one-day delivery feature in some markets. The report points out that free one-day delivery had been limited to only products over $35. However, currently, there is no minimum order size.
Amazon is likely to spend heavily on warehouses and other infrastructure to make this feature more common across the US in the future. This investment along with other investments are likely to drag down Amazon’s booming net profit in the second quarter.
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Amazon’s revenue from subscriptions continues to surge
Amazon has also been investing heavily to make its Prime membership compelling to Americans, even after hiking its price from $99 to $119 annually last year. These efforts seem to be paying off. As the graph above shows, the company’s revenue from subscriptions, which mostly consists of Prime membership, has been surging.
Amazon is possibly the preferred FAANG (Facebook, Amazon, Apple, Netflix, and Google) stock at the moment. The tech giant has overtaken Apple as the second-most valuable public company in the world and now has a market cap of $930.5 billion. Meanwhile, Microsoft has a market cap of $974 billion, while Apple has a valuation of $907 billion as of May 10.