How Speedy Deliveries Became Faster

Shrinking from weeks to hours, our delivery expectations started with Amazon Prime.

And now, further diminishing time and distance, Amazon announced one billion extra packages would be on our doorsteps.

Speedy Delivery

Steve Jobs once said, “People don’t know what they want until you show it to them.” Leaping from Apple to Amazon, we can say, we didn’t know we wanted Prime until Jeff Bezos offered it to us.

Just 20 years ago, Amazon was mostly a book and CD seller. To get their free Super Saver Shipping, we had a $25 minimum order and an 8 to 10-day delivery wait. For an extra $9.48, we could get two-day delivery. One day was $16.48.

But then a prime number became a delivery revolution. For a $79.00 yearly fee, our orders arrived in two days.

Amazon Prime

It all began during the 2004 winter holiday season on a Saturday close to Christmas. At a boathouse meeting, Jeff Bezon told a group of executives that he wanted “to draw a moat around our best customers…” with a new two-day subscription service that was pricey and yet affordable. They chose $79.00 and added that you could share it with four family members.

The big challenge though was making Prime functional. For several years, Amazon had been experimenting with speeding up shipping. When they began, it took 24 hours for an order to leave the fulfillment center. When they finished, it shrunk to three hours for certain items. The key was new software, “rejiggered” layouts, and lots of practice.

Again, now, Amazon needs new software, “rejiggered” layouts, and lots of practice” to upgrade deliveries to underserved rural areas. As they described, with 200 new delivery stations and 100,000 new jobs, they could better serve 13,000 rural zip codes across 1.2 million square miles.

After a whopping 6.3 billion parcel deliveries in 2024, Amazon jumped ahead of UPS and FedEx:

Our Bottom Line: Reference Points

A behavioral economist would tell us that Amazon transformed our online shipping reference points.

A reference point influences our opinion. With gasoline, for example, a previous week’s price of $4.00 a gallon becomes a reference point that signals $3.50 is a bargain. But if the price beforehand had been $3.00, then $3.50 looks astronomical. Similarly, at work, when an associate gets a 7% raise, 5% makes us miserable. If our stock portfolio plunges, we don’t feel so bad knowing that the S&P declined even more.

So where are we? Twenty years ago, our reference point for fast shipping was Amazon’s Super Saver 10-day deal. Now it could be one day or even less. According to the Daily Mail, one happy British household got its delivery in 75 minutes.

The Amazon drone in our featured image could signal more 75-minute deliveries.

My sources and more: We can start with Sherwood’s focus on Amazon’s delivery prowess. But if you want the behavioral side of reference points and framing and anchors, do go to economics Nobel Laureate Daniel Kahneman’s superb book, Thinking Fast and Slow. And finally, for more about the beginning of Amazon Prime, Vox had the details while The Daily Mail had the 75 minutes delivery story.

Please note that several of today’s sentences were in a previous econlife post.