Amazon is discontinuing its same-day delivery service, Amazon Today, which aims to provide fast deliveries from shopping malls and brick-and-mortar retailers.
The company has stopped new developments on the service and will begin winding down operations. Most of the program is expected to end by December 2, according to company insiders.
Closure Timeline and Impact on Employees
Some retail partners will be able to fulfill orders via Amazon Today until January 24, 2025. The majority of the program is being phased out much sooner.
Around 175 employees are part of the team, according to Amazon, contrary to initial reports estimating the number at 300.
Some workers were informed of their layoffs during a company meeting on Monday, and affected employees will be offered severance packages. Others will have the opportunity to transition into different roles within the company.
A Costly Experiment
Amazon Today was launched in 2022. It allowed retailers to provide rapid delivery options from their physical stores, with Amazon’s Flex drivers collecting packages and delivering them to customers within hours.
The service was designed to enhance Amazon’s same-day delivery capabilities, helping the company compete with rivals like Instacart and DoorDash, which have been expanding into the retail delivery space.
However, Amazon Today proved to be more expensive to operate than traditional delivery services, partly due to the inefficient use of driver capacity.
Flex drivers, who use their personal vehicles for deliveries, often had only a few packages in their cars when making Amazon Today runs, leading to lower efficiency compared to routes that originate from centralized Amazon warehouses.
Despite its ambitions, the service was not able to achieve the same scale and efficiency as Amazon’s other delivery initiatives.
The company had been actively signing up retailers like Office Depot, Staples, Petco, PacSun, and GNC, among others.
However, the decision to shutter Amazon Today comes as a surprise, particularly since Amazon was reportedly onboarding new retail partners and promoting the service at a conference just last week.
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A Shift in Strategy Under CEO Andy Jassy
The shutdown of Amazon Today is the latest in a series of cost-cutting measures undertaken by CEO Andy Jassy since he assumed leadership in 2021.
Jassy has been focusing on trimming expenses and evaluating unprofitable projects amid changing macroeconomic conditions. In his tenure, the company has laid off more than 27,000 employees—the largest workforce reduction in its history.
Jassy has taken a more pragmatic approach than his predecessor, Jeff Bezos when it comes to investments in new ventures.
He has already closed several costly or unproven projects. These include Amazon’s telehealth service, the Treasure Truck mobile retail unit, and a video-calling device aimed at children.
Future Focus on Fast Deliveries
Despite winding down Amazon Today, the company remains committed to its broader goal of providing rapid deliveries.
Amazon continues to invest in same-day delivery facilities and explore partnerships to improve customer experience and keep pace with competitors.
A spokesperson emphasized the company will work closely with its retail partners to ensure a smooth transition out of Amazon Today.
The closure of Amazon Today highlights the ongoing challenges faced by tech giants in balancing innovative services with operational efficiency.
As the company streamlines its offerings, it will continue to focus on its core strengths, leveraging its vast distribution network to maintain its edge in the delivery market.
