On Amazon’s earnings call a few days ago, its CFO mentioned that its “core free two-day offer [was] morphing into — or evolving into a free one-day offer.” The CFO also said that Amazon plans to invest $800M just in Q2 to make faster shipping happen. Retailers and journalists quickly jumped on the news to speculate what it would mean for eCommerce. Here are our thoughts.

Do shoppers care? Not as much as retailers think. While fast shipping is a nice-to-have, consumers consistently tell us they prefer free shipping. While 52% of shoppers who Forrester surveyed said that free shipping was a big driver of where they shopped online, only 8% of shoppers said that expedited shipping was important for them. Furthermore, shoppers also said better prices, not shipping options, was the top reason for purchasing on Amazon specifically — which brings us to the next questions . . .

Is this really a big deal? It’s hard to say, because Amazon is masterful at obfuscation and there are critical questions that need answers to understand the impact. For years, Prime customers have often received packages faster than expected, many the next day, some the same day, and some within a few hours. How many more orders will one-day Prime now affect? Who will be shipping these items (Amazon or a carrier)? Is Amazon passing the cost on to customers or raising the price of Prime? What is the $800M being spent on? Just because Amazon makes one-day Prime a “standard,” it does not mean any given item will arrive in that way. Amazon says as much on its own site: “Not all of the items listed on our site are available immediately, so selecting One-Day or Two-Day Shipping does not necessarily mean your order will arrive in one or two days.”

Will this drive loyalty? This is also hard to tell, but we’re not bullish that the number is huge. Why? Because so many Prime members are already getting Prime orders very quickly, and the ecosystem is already so rich (Video, Music, Lending Library, Echo, etc.). We estimate that Prime gained 9–10M new customers in the US alone in 2018. How many more customers will join the ecosystem now that shipping could be even faster? How many existing customers will spend incrementally more as a result of even faster shipping? Will fewer customers churn from Prime as a result of this? What we know is that Amazon’s been spending aggressively on shipping speed over the years at the same time that North American retail growth has slowed down. That doesn’t suggest consumer behavior will significantly change in the future, though Amazon has achieved the impossible before.

Is this a big risk for Amazon? Yes, but it depends on the disclaimers and exclusions Amazon puts around its delivery promises. One of the biggest risks we see is Amazon systematically failing to meet its targets. (Late shipments are a common enough problem that Capital One has a service to help you get a refund for late packages.) As big tech comes under a microscope in 2019, the open question is whether the FTC will finally enforce postal delivery rules that are already in place. We are also hearing lawmakers and city planners consider fines, taxes, and restrictions around eCommerce deliveries, which are creating negative externalities in residential communities. That could dampen the adoption of one-day shipping.

What will likely happen now? Other retailers will likely jump on board in an attempt to also offer ultra-fast shipping, even though it’s unnecessary. For years, retailers have been aggressively pursuing faster shipping to catch up with Amazon, often while overlooking bigger opportunities such as free returns (Amazon often makes you pay to return a package), transparency around the delivery process, or providing an estimated time of delivery. We suggest retailers focus on those efforts and on getting an accurate view of store inventory and on promoting in-store pickup.

All this said, retailers can find opportunities if they resist distraction from Amazon’s PR machine. The top reason that customers purchase online is that prices are low, and while Amazon has a reputation for leading on price (studies from years past have proven that), that price leadership seems to be on shaky ground. Just the other day, I browsed on Amazon to order all free clear®, my go-to detergent. The price on Amazon was more than three times the prices at Walmart and Target stores! As shipping gets faster, will customers have to pay more for the items they order? That seems to conflict with the Amazon playbook we know, but perhaps Amazon is finally passing on to shoppers the tradeoff between free and fast. Retailers should exploit differences like this as much as they can, rather than chase Amazon’s delivery promise.