Amazon Debuts One-Hour Delivery for Manhattan Customers

By Spencer Soper  Dec 18, 2014 12:35 PM ET 

Amazon.com Inc. (AMZN) began offering one-hour delivery in Manhattan today, the retailer’s latest effort to connect consumers with products they order online as quickly as possible.

The “Prime Now” program covers shipments of tens of thousands of household goods, including shampoo, paper towels, toys and books, the Seattle-based company said in a statement. The service will expand to additional cities in 2015, with the program available to Amazon Prime members who pay $99 annually for fast delivery.

Prime Now raises the bar in online delivery as Amazon competes with Google Inc.’s same-day Shopping Express service and EBay Inc.’s same-day EBay Now program. Amazon, which has added grocery deliveries and Sunday deliveries in recent years, is working to lock in customers to buy things online that they need immediately rather than rushing to the store. Chief Executive Officer Jeff Bezos has also said the Web retailer is testing drones for same-day package service.

The new service will hurt convenience stores selling batteries and paper towels and is unlikely to make Amazon profitable in the near term, said Michael Pachter, an analyst at Wedbush Securities in Los Angeles.

“Their prices are so low on convenience items that it won’t offset the incremental delivery cost,” Pachter said. “It will help in the long term, as it is another reason for consumers to sign up for Prime, which brings in $99 per year and drives higher overall purchase activity.”

Photographer: Peter Foley/Bloomberg

Jeff Bezos, chief executive officer Amazon.com Inc.

Manhattan Project

Amazon’s new building on 34th Street in Manhattan, which the company has said will be primarily office space, will serve as a delivery hub for Prime Now orders.

“There are times when you can’t make it to the store and other times when you simply don’t want to go,” Dave Clark, Amazon’s senior vice president of worldwide operations, said in a statement. “There are so many reasons to skip the trip and now Prime members in Manhattan can get the items they need delivered in an hour or less.”

Two-hour delivery is free to Prime members and one-hour delivery is available for $7.99. The service is only available to the 10001 ZIP code, a commercial area around Madison Square Garden with roughly 20,000 residents. Amazon said it plans to expand the area to more ZIP codes today, without providing specifics.

The company keeps adding perks to its Prime program, which has tens of millions of subscribers in the U.S. who are its most active shoppers. In October, the company reported a third-quarter loss of $437 million, its worst since at least 2003.