Amazon introduces free same-day delivery for Prime members

SEATTLE - Stepping up its challenge to brick-and-mortar retailers, Amazon.com launched a new shipping feature Thursday that will let shoppers buy a product on its website by noon and have it delivered by 9 p.m., seven days a week.

The new service, called Prime Free Same-Day Delivery, will be available on more than one million products and in 14 metropolitan areas in the United States, including Philadelphia. There will be no shipping cost for members of Amazon's $99-a-year Prime service, as long as the order tops $35.

Amazon introduced same-day shipping in seven markets in 2009 and has expanded it since then. But Prime customers have had to pay an extra $5.99 per order for the expedited shipping. (They'll still have to pay $5.99 for same-day delivery if their order is less than $35.) Non-Prime shoppers will continue to pay $8.99 per order and 99 cents per item for same-day delivery in the markets where it is available.

Amazon has been pumping money into building warehouses and improving the logistics inside them, in large part to improve shipping speed. The company will contract with local couriers to deliver items to consumers' homes.

Amazon vice president Greg Greeley would not say how much the service would cost Amazon. But it is bound to increase shipping costs, an expense closely watched by Wall Street. In the first quarter, Amazon's worldwide shipping costs climbed 26 percent, to $2.3 billion.

But Greeley says he expects Amazon to become more efficient as more people use the service. And, with a $35 minimum purchase, expenses should be offset by larger orders.

"We take a long-term view on all these programs," Greeley said.

Same-day delivery will cover more than 1 million items, and up to 4 million in markets close to multiple Amazon warehouses. The service will not be immediately available in Chicago and Houston, the third- and fourth- largest cities in the country.

That's because the company could not be certain items ordered by noon in those markets would be delivered by the end of the day.

The products available include books, video games and CDs, coffee makers and water filters, as well as HDMI cables, batteries, and power strips. Amazon will designate the eligible products with a Prime Free Same-Day logo on the product page.

Shoppers can also check the new Prime Free Same-Day box on the retail site to filter items eligible for the service.

The service slices away at one of the key advantages physical stores hold over Amazon: the instant gratification of possessing a product after it has been purchased.

"We're constantly looking at how we can make things faster for customers," Greeley said.

As online shopping has become more prevalent, affordable same-day delivery was seen as the Holy Grail.

"It's that last bit of fruit that people want. . . . It would probably win over those last few holdouts that just got to have stuff now," said Michael Pachter, an analyst at Wedbush Securities in Los Angeles. But, he said, it's a logistical nightmare.

Although every retailer would like to offer same-day delivery, few have the infrastructure to handle such a complex undertaking or the sales volume to make the service worthwhile.

Last December, Amazon launched Prime Now, a quick-shipping service for thousands of items such as toothpaste and batteries in Manhattan. Prime Now is available to Prime members through a mobile app that offers one-hour delivery for $7.99 and free two-hour delivery. Amazon has since expanded that service to six other cites.