Amazon is speeding up deliveries in four cities as competition heats up with Walmart

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Employees sort and move packages at an Amazon fulfillment center in Grapevine, Texas, on December 5, 2018.

Employees sort and move packages at an Amazon fulfillment center in Grapevine, Texas, on December 5, 2018. (Shaban Athuman/Dallas Morning News/TNS)

Amazon has been opening smaller warehouses around Dallas, Phoenix, Philadelphia and Orlando to make its same-day deliveries faster.

The largest online retailer said Tuesday that it has updated its delivery program with guaranteed arrival times throughout the day for up to 3 million items, such as diapers, dog food and phone chargers, that are marked “Today by.”

Orders placed by 8 a.m. are delivered by 1 p.m. Orders placed from 8 a.m. to 1 p.m. arrive by 6 p.m. and so on. While this service is free for Prime members, all customers can use it with a fee.

The same-day upgrade covers a much bigger selection than Amazon’s Prime Now 1- and 2-hour service, which has tens of thousands of products, including fresh groceries and more limited best sellers in other categories such as electronics, home, kitchen and toys.

Amazon, which changed the e-commerce delivery proposition when it launched Prime in 2005, has been tweaking shipping for years and has forced retailers to spend billions to set up competing services.

And Amazon’s move comes as the retail industry is debating how shoppers may be turning to online orders more frequently due to the spread of the coronavirus. The thinking is that shoppers who try it once will be hooked and accelerate the already fast-growing e-commerce segment.

Jon Alexander, Amazon’s director of delivery experience, said the company can do this because it’s storing need-it-today items in new facilities it has built closer to customers.

The mini-fulfillment centers are about 100,000 square feet, one-10th the size of one of its regular fulfillment centers. Shorter drive times will lower carbon emissions, which is another goal of Amazon’s, Alexander said.

Amazon has opened one of the smaller centers in Carrollton, Texas. Under this program, rather than shipping an item from a fulfillment center to a sort center and then to a delivery station for pickup, these new facilities can do three functions under one roof, Amazon said.

Walmart has been using its Supercenters as fulfillment centers.

Walmart tried a membership delivery service in the past and ditched it, but it’s working on a competitor to Prime again, according to a report in Vox last week. Walmart confirmed to CNBC that it’s working on a paid membership model called Walmart+ but provided no details.

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