Amazon analysts expect same-day delivery to boost margins in Q3
By Arriana McLymore
NEW YORK (Reuters) — Investors will look for signs that Amazon's aggressive expansion of same-day delivery services helped increase its third-quarter profit margin by spurring shoppers to place more frequent and bigger orders.
Same-day delivery is now offered in at least 90 cities, free for Prime members while non-members pay $9.99. The retailer invested heavily in 2020 and 2021 in logistics to make same-day delivery, which it introduced in 2015, available in more places.
When Amazon reports earnings on Thursday, investors and analysts anticipate gross profit margins will rise 2.67% from last year to 47.37%, according to LSEG.
Fast delivery «drives more frequency to Amazon's website,» CFRA analyst Arun Sundaram said.
«It drives larger basket sizes for Amazon. Now that Amazon is introducing a lot more everyday essential items, people are finding it very convenient to go on Amazon and buy things like paper towels, food or packaged goods,» he said.
Amazon packs its same-day delivery centers with its top 100,000 products. The company in April said it completed a reorganization of its fulfillment network, dividing the U.S. into eight regions to shorten delivery distances and get merchandise to shoppers faster.
«What we find is when we open up same-day (delivery), you generally see customer engagement go up and purchasing go up,» Sarah Mathew, vice president of global delivery experience at Amazon, told Reuters in a recent interview. «But the lift of how much it goes up varies from product to product.»
The company will continue to build fulfillment centers, expanding same-day service, Mathew said.
Same-day delivery also boosts Amazon.com (NASDAQ:AMZN)'s website traffic. This positions the retailer to
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