Amazon Shuts Down Same-Day Delivery Service, Amazon Today

In a surprising move that underscores Amazon’s ongoing cost-cutting measures, the e-commerce giant is shutting down its same-day delivery service, Amazon Today. The service, which allowed retailers to offer speedy deliveries from their physical stores, will cease operations for most partners by December 2nd, 2024, impacting approximately 300 employees. While some employees will be laid off with severance packages, others will be transitioned to different roles within the company. This decision comes as a shock, especially considering Amazon was recently promoting the service to potential new retail partners. The closure highlights Amazon’s shift towards prioritizing more cost-effective delivery strategies amidst a broader trend of scaling back less profitable ventures.

Key Takeaways: Amazon Today’s Demise

• Amazon Today, Amazon’s same-day delivery service from brick-and-mortar stores, is being shut down.
• The shutdown will impact approximately 300 employees, with some facing layoffs and others being reassigned.
• Most partners will cease operations by December 2nd, 2024, although select partners will have an extended deadline of January 24th, 2025.
• The closure reflects Amazon’s broader cost-cutting strategy, mirroring previous cancellations of projects like Amazon Care and Amazon Glow.
• The service’s higher cost compared to traditional Amazon delivery methods, due to inefficient route optimization, contributed to its closure.

Amazon Today: A Costly Venture

Launched in 2022, Amazon Today aimed to provide rapid delivery from participating retail partners’ physical locations. Utilizing Amazon Flex drivers—independent contractors using their own vehicles—the service promised same-day delivery of orders placed through Amazon’s platform. Retailers like Office Depot, Staples, Petco, PacSun, GNC, and Fabletics were among those participating. While seemingly a logical extension of Amazon’s delivery network and a competitive response to services like Instacart and DoorDash, Amazon Today proved to be more expensive than anticipated. Sources within the company reveal that the routes used for Amazon Today’s “retail deliveries” were often less efficient, failing to fully utilize the cargo capacity of the Flex drivers’ vehicles compared to routes originating from Amazon fulfillment centers. This inefficiency, coupled with the increasing pressure to cut costs under CEO Andy Jassy, ultimately led to the service’s demise.

The Inefficiency of Retail Deliveries

The significant difference in cost between fulfilling orders from Amazon warehouses versus partnering retail stores was a primary driver of Amazon Today’s closure. Traditional delivery routes from Amazon warehouses allow for greater package consolidation and optimized routing, maximizing driver efficiency and minimizing overall delivery costs. In contrast, the picking up and delivering of individual packages from disparate retail locations proved considerably less efficient, leading to increased expenses for Amazon. This issue highlights the complexities of managing a last-mile delivery network with a high degree of both geographic dispersion and low delivery volume at each individual retailer location.

Amazon’s Broader Cost-Cutting Strategy

The shuttering of Amazon Today is just the latest move in Amazon’s extensive cost-cutting efforts initiated by CEO Andy Jassy. Since 2022, the company has aggressively pursued reducing expenses, including layoffs affecting over 27,000 employees. This strategy reflects a broader shift within the company, moving away from less profitable ventures and prioritizing established, more efficient operations. Previous casualties of this cost-cutting drive include the telehealth service Amazon Care, the kids’ video-calling device Amazon Glow, and the roving deals program Treasure Truck.

A Shift in Priorities

Jassy’s leadership marks a departure from the more expansive approach of his predecessor, Jeff Bezos. While Bezos was known for aggressively pursuing new markets and technologies, Jassy seems more focused on streamlining existing operations and profitability. This change in approach is evident in the prioritization of core Amazon services and the decision to eliminate projects that haven’t demonstrated significant and sustained returns on investment. The elimination of Amazon Today fits perfectly within this strategic recalibration, signaling a renewed emphasis on maximizing efficiency and generating profits within established lines of business.

Impact on Retailers and Amazon Flex Drivers

The closure of Amazon Today will undoubtedly impact the participating retailers and Amazon Flex drivers. While Amazon assures its retail partners that it’s working towards a smooth transition and that its commitment to fast delivery remains unchanged, the loss of access to a same-day delivery network is certainly a setback. For Amazon Flex drivers, the reduction in available delivery routes could directly affect their earning potential. However, Amazon confirms that those working on Amazon Today will be given resources support and prioritized assistance in finding alternative roles in the organization.

The Future of Fast Delivery at Amazon

Amazon’s commitment to fast delivery will continue, although Amazon Today likely will not play a role in that going forward. Amazon continues to invest heavily in infrastructure focused on streamlining same-day and faster delivery alternatives. This includes expanding infrastructure upgrades within existing fulfillment centers, additional logistics facilities, and ongoing enhancements to delivery route optimization algorithms. These investments suggest that, even though Amazon Today is being discontinued, Amazon is still keenly focused on the critical nature of rapid delivery to its overall success and remains committed to fast-paced delivery services. The approach will quite likely shift from collaborating with brick-and-mortar retail partners to focusing more heavily on its own network of fulfillment centers and optimized logistics.

Conclusion: A Strategic Retrenchment

The closure of Amazon Today serves as a clear indicator of a significant shift in Amazon’s strategic priorities under Andy Jassy’s leadership. The decision highlights the growing importance of cost-effectiveness and operational efficiency in a dynamic retail landscape that demands quick adaptation. While the end of Amazon Today may signal a less expansive approach, it underscores the company’s long-term commitment to efficient, rapid delivery and continuous innovation to achieve this priority objective. The discontinuation of this venture serves as a strong reminder that even for a titan like Amazon, even seemingly successful programs needs to be scrutinized for overall profitability and may be discontinued if they do not meet the company’s overall goals.