Why is Amazon shutting down 'Amazon Today' same-day delivery service?

Amazon is winding down its 'Amazon Today' service, which provided same-day delivery from brick-and-mortar retailers, marking another step in the company’s ongoing cost-cutting efforts, according to a CNBC report.

Launched in 2022, the service allowed customers to receive items from local stores within hours, leveraging Amazon's Flex delivery drivers.

Closure confirmed amid cost-cutting efforts

Amazon has halted further development of the service and informed employees about the shutdown on Monday, according to sources familiar with the matter.

Most of the program will be discontinued by December 2, with select retail partners able to fulfill orders until January 24, 2025.

Approximately 175 employees involved in Amazon Today will either be laid off with severance or transitioned to other roles within Amazon, the company confirmed.

Amazon Today launched to speed up delivery

Amazon Today aimed to streamline same-day delivery by connecting customers with retailers such as Petco, Staples, Office Depot, GNC, and Fabletics.

Flex drivers picked up packages from participating stores and delivered them within hours, offering a rapid alternative to traditional delivery.

However, operational challenges reportedly undermined the service’s sustainability.

“Retail deliveries” like those offered through Amazon Today proved to be less efficient than Amazon’s standard delivery model, where Flex drivers collect larger volumes from warehouses.

With fewer items per route, these deliveries were less cost-effective, which factored into the decision to discontinue the service.

Broader implications for Amazon's business strategy

The closure of Amazon Today aligns with Amazon CEO Andy Jassy’s broader strategy to cut costs and focus on the company’s core strengths.

Since 2022, Amazon has reduced its workforce by over 27,000 employees, making it the largest layoff campaign in the company’s history.

In addition to Amazon Today, Jassy has shuttered other initiatives, including telehealth services, a video-calling device for children, and the company’s roving Treasure Truck.

Despite scaling back this service, Amazon continues to invest in faster delivery networks to remain competitive against firms like DoorDash and Instacart, which have also expanded beyond food and groceries.

Amazon has recently added more fulfillment centers dedicated to same-day delivery in strategic markets.

Amazon was still onboarding new retailers

The decision to discontinue Amazon Today comes unexpectedly, as Amazon had recently pitched the service to retailers at a conference.

The program was part of the company’s strategy to enhance delivery speed by integrating physical retail partners.

The service aimed to attract new business, but the high costs of individual retail deliveries outweighed its potential benefits.

Impact on retailers and future partnerships

Amazon has assured that it is working closely with participating retailers to ensure a smooth transition during the shutdown.

The service’s termination may prompt some retailers to explore alternative delivery options, including partnerships with other delivery platforms.