US multinational technology company and online marketplace Amazon has launched free next day delivery for Prime Members in Sydney and Melbourne in an effort to ramp up subscription numbers.
The company recently opened its 200,000 square metre robotic fulfilment centre in Kemps Creek, Sydney, which the company says products can reach 80% of the eligible population within a 12-hour drive.
Amazon invested $500 million in the site to launch the service, with the intent of competing with Woolworths, who recently purchased MyDeal for $243 million to improve its online marketplace.
Prime membership customers within most postcodes of Sydney and Melbourne will be eligible for free same day delivery with no minimum spend. According to Janet Menzies, country manager for Amazon Australia, next day delivery is “a really important breakpoint” for customers, and that in the future, Amazon would like to move to same day delivery.
Whilst Amazon is trying to improve its service here in Australia, its faced with the nations unique low-density population and expensive last-mile delivery, unlike in Britain and the US where the service boasts fast delivery and low prices.
Australia is now home to over 2 million prime members, who spend just $6.99 a month, whilst 45 percent of the US population spends A$21.57 (US$14.99) a month. The price has remained low in Australia to encourage signups as they grow their offering locally.
In Australia, Amazon achieved around $3 billion gross transaction value for the 2021 calendar year. Craig Woolford, head of consumer research at MST Marquee estimates that if Amazon achieves the high penetration rate seen in the US or Britain, that number could jump to between $27 billion and $40 billion.
Amazon hopes to expand next-day delivery to more parts of the country in coming months.
