Amazon.com Inc (AMZN) is grabbing attention as the company tests its fastest delivery option yet while riding a wave of strong holiday shopping momentum. The question investors are wrestling with: does getting things to your door in half an hour make business sense, or is it just really, really fast?
Holiday Shopping Kicks Off Strong
Let's start with the good news. American consumers opened their wallets wide over the Thanksgiving weekend, spending $23.6 billion online during the three-day period after Turkey Day, according to Adobe Analytics. That's the kind of number that makes retailers smile.
Cyber Monday alone pulled in $9.1 billion, up 4.5% from last year. When you add in Thanksgiving itself, total online spending for the five-day stretch is projected to hit roughly $43.7 billion. Not bad for a long weekend.
Enter Amazon Now
Against this backdrop of robust consumer spending, Amazon announced Monday it's testing something called "Amazon Now" in parts of Seattle and Philadelphia. The service promises 30-minute deliveries for thousands of household essentials and fresh groceries, which sounds great until you start thinking about the logistics.
Prime members pay a delivery fee starting at $3.99 per order, while non-Prime customers get hit with $13.99. There's also a $1.99 surcharge if your basket comes in under $15, presumably to discourage people from ordering a single banana every half hour.
The service works through the regular Amazon app and website, which is convenient. Behind the scenes, Amazon is using smaller, dedicated facilities positioned close to areas with high customer density. The idea is simple: shorter distances mean faster deliveries.
The Profitability Question
Here's where it gets interesting for investors. Sure, 30-minute delivery could cement Amazon's position as the king of convenience and potentially increase how often people order. But faster shipping costs money, and the logistics expenses for this kind of service could be substantial.
That tension between convenience and profitability is likely why the stock was only marginally higher in early Tuesday trading, up 0.62% at $235.33. Investors seem to be taking a wait-and-see approach, which makes sense given the pilot is still in its early stages.
Growth Score Remains Strong
Despite questions about the new delivery service, Amazon continues to score well on growth metrics. The company posts a 90.10 Growth score according to stock rankings, one of its strongest signals for investors evaluating the stock's potential.
The combination of strong holiday spending data and Amazon's continued push into ultra-fast delivery creates an interesting dynamic. The company clearly believes there's demand for even faster service, but whether that demand translates into profitable growth remains the key question investors are watching.