I'm LongbridgeAI, I can summarize articles.Amazon is reportedly planning 'Project Mercury,' a massive expansion of its same-day delivery network to over 1,000 facilities within five years. This initiative aims to compete with Walmart by making basic household goods immediately accessible to 80% of U.S. Prime subscribers. While Amazon labeled the report speculative, it confirmed a focus on faster delivery. The move comes as consumers prioritize cost-effective essentials amid rising living costs.
By Bill Peters
BofA analysts say Amazon's reported plans to expand same-day fulfillment centers represent an effort to make basic goods 'immediately accessible'
Business Insider reported that an Amazon initiative named Project Mercury would widen the online retailer's same-day delivery network to more than 1,000 facilities over the next five years.
Amazon.com is reportedly weighing a massive expansion in same-day delivery service - a move Bank of America analysts said could signify a bigger effort to keep up with Walmart as a destination for cheaper household essentials.
Business Insider reported on Wednesday that an Amazon initiative, named Project Mercury, would seek to widen the online retailer's same-day delivery network to more than 1,000 facilities over the next five years. That expansion, which could reportedly cost billions of dollars, would mark an increase of more than 10 times the roughly 85 centers Amazon currently uses for same-day service, Business Insider said.
The online retail giant described the project, which would place same-day delivery facilities within 10 miles of 80% of its U.S. Prime subscribers, as a "transformational initiative to reshape the same-day delivery network," according to the report.
The BofA analysts noted that those same-day delivery facilities carry around 90,000 of Amazon's frequently purchased products, like paper towels, cough medicine and fresh items.
"Thus, Mercury's strategy is less about expanding selection and more about making a concentrated set of common products immediately accessible," the analysts said.
They also noted that Walmart's stores currently allow for quick delivery service within 10 miles of 90% of the U.S. population. Seventy percent of Walmart's online orders were delivered on the same day, BofA said, with more than 30% in under three hours.
Amazon, when reached for comment, said the Business Insider report was "speculative in nature and based on a tentative planning document." The company declined to confirm the reporting in the story.
"We're always forecasting across our operations, and we regularly produce and revise numerous versions of planning documents," Steve Kelly, an Amazon spokesperson, said in a statement. "Any internal projections are preliminary, subject to significant revision and shouldn't be treated as finalized plans.
"That said, it's no secret that we're focused on delivering faster for customers and the expansion of our same-day delivery network is playing a big role in that," he continued.
Amazon in recent years has tried to speed up delivery times, set up warehouses closer to people's homes and sell more basics, like groceries, in an effort to compete more directly with Walmart. As higher gas prices and rising costs of living stretch consumers' budgets, covering expenses for basics has become a bigger priority.
In July, Amazon CEO Andy Jassy said that as the company has expanded same-day service to more areas, it delivered some 40% more items on the same day or overnight in the first six months of this year, when compared to the same time frame last year. He also said Amazon was the "second-largest grocer in the U.S." The company has also seen same-day delivery growth in its pharmacy business.
The Business Insider report said that, based on Project Mercury's projections, same-day fulfillment centers could make up around 28% of Amazon's package volume in 2029 and half by 2035. The report added that the project's three-year operating plan called for a $6.8 billion budget for same-day fulfillment-center capacity in the U.S. through 2027.
Shares of Amazon (AMZN) were up around 2.3% on Thursday. The stock is up around 9% so far this year, and a bit off highs of around $284 reached last month.
Walmart's stock (WMT) was down 0.7% on Thursday.
-Bill Peters
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