Amazon to shut down speedy brick-and-mortar delivery service
The company has stopped any new development of the service, called Amazon Today, and will begin to wind it down, according to people familiar with the matter.
Amazon is shutting down a service that offers same-day delivery from mall and brick-and-mortar retailers, CNBC has learned.
Amazon has made the decision to discontinue its same-day delivery service from brick-and-mortar retailers, known as Amazon Today, which was launched in 2022. The service allowed retailers who sell on Amazon to offer speedy delivery from their physical stores and shopping malls in select cities. According to sources, Amazon has stopped developing the service and will begin winding it down, with the majority of the program set to be shut down by December 2. Select retail partners will be able to continue fulfilling orders through January 24.
Amazon Today was a unique service that allowed customers to receive products from their favorite retailers in a matter of hours. The service was part of Amazon's push to get online purchases to customers' doorsteps at faster speeds, competing with other companies like Instacart and DoorDash. The service had signed up several retailers, including Office Depot, Staples, Petco, PacSun, GNC, and Fabletics.
However, the service was reportedly more costly than traditional delivery routes, where Flex drivers can fill their cars with packages from an Amazon warehouse. Amazon Today routes, which the company calls "retail deliveries," didn't usually fill up a driver's trunk, making the program less worthwhile for the Flex contractors. This, combined with the high costs of operating the service, likely made it a less viable option for Amazon in the long run.
The closure of Amazon Today will result in a small number of layoffs, with employees being provided with severance. Others will be transitioned to other positions within the company. The service had around 300 employees working on it.
Amazon's decision to shut down Amazon Today is part of the company's efforts to cut costs and prioritize its investments. Since taking over as CEO in 2022, Andy Jassy has been focused on reducing costs and streamlining the company's operations. This has included laying off over 27,000 employees, axing several projects, and taking a harder line on the company's unproven and costlier bets.
Despite the discontinuation of Amazon Today, the company continues to prioritize fast delivery. Amazon is adding more facilities focused on same-day deliveries and is working with its retail partners to ensure a smooth transition. The company will also continue to invest in fast delivery options.
The decision to shut down Amazon Today comes as a surprise, as the company was in the process of onboarding other retailers and pitching the service to more retailers at a recent conference. However, the service's high costs and lack of efficiency likely made it a less viable option for Amazon in the long run.
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Amazon Today, also known as "Today's Deals" or "Deals of the Day," is a section on Amazon's website that features limited-time discounts and promotions on various products. Here's a brief history of Amazon and the evolution of Amazon Today:
Early Days (1994-1997)
Amazon was founded in 1994 by Jeff Bezos as an online bookstore called Cadabra, Inc. The name was later changed to (link unavailable), Inc. in 1995.
In 1997, Amazon went public with an initial public offering (IPO) that raised $54 million.
Expansion and Growth (1998-2006)
Amazon expanded beyond books to sell other products, such as CDs, videos, and software.
In 2000, Amazon launched its marketplace platform, allowing third-party sellers to list and sell products.
Introduction of Deals (2006-2011)
In 2006, Amazon introduced the "Gold Box" feature, which offered limited-time deals on various products.
In 2011, Amazon launched "Lightning Deals" and "Deal of the Day" sections, which became the foundation for Amazon Today.
Amazon Today (2012-Present)
In 2012, Amazon consolidated its deal sections into a single page called "Today's Deals."
Amazon Today now features various deal types, including:
Deal of the Day (24-hour deals)
Lightning Deals (limited-time deals)
Savings and Sales
Prime Deals (exclusive discounts for Prime members)
Holiday-specific deals (e.g., Black Friday, Cyber Monday)
Key Features
Limited-time offers: Deals are available for a short period, creating a sense of urgency.
Variety of products: Discounts are offered across various categories, from electronics to home goods.
Exclusive deals: Prime members receive additional discounts and early access to deals.
Impact
Amazon Today drives sales and increases customer engagement.
It helps clear inventory, making room for new products.
The section promotes competition among sellers, encouraging price reductions.
Amazon Today has become a key feature of the Amazon shopping experience, offering customers significant savings and encouraging repeat business.