London Daily

Focus on the big picture.
Sunday, Aug 23, 2026

How Amazon Can Afford to Ship a $2 Stick of Deodorant to Your House by Tomorrow

How Amazon Can Afford to Ship a $2 Stick of Deodorant to Your House by Tomorrow

Amazon's dropping the "add-on item" tag from a lot of its inventory.

Amazon made waves when it announced Prime's move from two-day to one-day shipping. Over the last few months, it's taken steps to expand one-day shipping to more and more items, and its most recent effort involves removing barriers for one-off orders of low-priced products -- items like a $2 stick of deodorant.

Previously, Prime members had to include most sub-$5 products with another item in order to qualify for their free shipping benefit. Now, many of those items are Prime eligible on their own, and Amazon could deliver them to your house the next day. The ability to ship millions of items in one day with no order minimum is a huge competitive advantage for Amazon, even over its brick-and-mortar competitors.


Owning the logistics network and scale

The biggest contributing factor to Amazon's ability to ship inexpensive items quickly is that it's already operating a large portion of its shipping itself. It's investing in more and more cargo planes (now with 50 leases) and it's opening several air hubs. Its new hub in Forth Worth, Texas, opened at the beginning of the month. It'll open another one in Cincinnati in 2021 capable of supporting 100 cargo planes and 200 takeoffs and landings per day.

Amazon is also taking more control of its last-mile delivery, relying less on its partners. Amazon's contractors will account for 23% of deliveries this year, according to an estimate from Cowen analyst John Blackledge. He expects that number to climb to 43% by 2024.

Amazon's growing share of its own deliveries is a result of its scale and its ability to cherry-pick the most cost-efficient deliveries. As Amazon increases order volume and the number of shipments headed to the same area, the company is increasingly incentivized to ship more of its own orders. It's already sending a plane and truck to the area anyway, so the marginal costs continually decrease. That's why CFO Brian Olsavsky said it's often both faster and less expensive for Amazon to ship orders itself than to rely on its shipping partners.

And that's why the e-commerce titan can afford to tack on a small box holding a $2 stick of deodorant to a delivery manifest at no additional cost to the consumer; the marginal cost for Amazon is often far less than if it was using a shipping partner.

That's not to say there are no costs. Amazon's probably still losing money on these small-item orders. But it's able to lose less money than anyone else, and the benefits could be huge.


Making everyone a Prime member

Fast shipping on low-priced convenience items or consumer staples had a noticeable impact on Amazon's sales in the second quarter. North American sales accelerated to 20% growth year over year, and Olsavsky attributed the acceleration to Amazon's one-day shipping efforts. Consumers seem more likely to buy items like deodorant or batteries if they can get them the next day instead of making a run to a local store just for one item.

That trend should continue as Amazon makes more stand-alone items available for one-day shipping.

Importantly, fast shipping on these items gives consumers yet another reason to subscribe to Prime. Prime membership in the U.S. is starting to reach a saturation point, but this could be a catalyst that unlocks even more growth in the program.

Continuing to grow Prime could be a massive boon for Amazon. First of all, Prime members spend more on average than nonmembers. The pattern has held true even as Prime scales, indicating Prime encourages more spending on Amazon and not just that those spending on Amazon are more likely to sign up for Prime. The program drives loyalty, encouraging consumers to at the very least start their online shopping search on Amazon.com.

Not only do Prime members spend more on Amazon, the increased number of searches thanks to growing Prime membership should also lead to greater ad revenue for the company. Ad revenue reached about $11 billion over the trailing 12 months.

Moreover, more Prime members shipping items via Prime means greater volume and density of shipments. As such, it may become even less expensive for Amazon to ship items itself, creating a virtuous cycle as more and more items become eligible for one-day shipping. Increased shipment volume could eventually open the door for Amazon to offer shipping services to other businesses to truly take advantage of its scale and turn its shipping expenses into a profit center.

Amazon is willing to take a loss on some small shipments now in order to grow Prime and other parts of its business that could become huge sources of profits in the long run. And that's bad news for brick-and-mortar competitors.


Should Amazon be on your buy list? It's on ours...

Motley Fool co-founders Tom and David Gardner have spent more than a decade beating the market. In fact, the newsletter they run, Motley Fool Stock Advisor, has quadrupled the S&P!*

Tom and David just revealed their ten top stock picks for investors to buy right now. Amazon made the list -- but there are 9 other stocks you may be overlooking.

Newsletter

Related Articles

0:00
0:00
Close
Iranian Hackers Shut Down British Power Plant for Four Days in Landmark Cyber Attack
Novak Djokovic Reveals Relentless Self-Doubt and Rejects Retirement in New Documentary
Trump Imposes 50% Tariffs on Canadian Goods After Bilateral Trade Talks Collapse
Australia Combines Indigenous Fire Knowledge With Satellite Tech to Combat Catastrophic Wildfires
Father and Son Jailed in Scotland Over £900,000 Airport Cannabis Smuggling Operation
UK Fraud Reports Surge Sevenfold as Criminals Exploit QR Codes in Parking Meters and Phishing Emails
Brighton Thrash Aston Villa in Four-Goal Opening Half as Manchester City Trail Bournemouth
Erin Patterson Appeals Triple Murder Convictions After Hotel Mixed Sequestered Jury With Prosecution
Bank of England Maintains Close Watch on Banks Amid Global Economic Uncertainty
Warm Weather and Tourism Support UK High Street Spending During Summer
Westminster Faces Continuing Political and Administrative Fallout From Epstein Files Release
UK Invests in Domestic Defence Drone Manufacturing to Strengthen Military Supply Chains
Around Five Million UK Households Face Higher Mortgage Payments by 2028
Bluetongue Virus Cases Rise Across England, Wales and Scotland
UK Government Holds First National Day for Victims and Survivors of Terrorism
Historic Summer Droughts Threaten UK Harvests and Put Further Pressure on Food Prices
UK Economy Holds Up in Second Quarter Despite Global Energy and Geopolitical Pressures
UK Opens National Artificial Intelligence Safety Testing Facility
UK Government Finalizes Plans to Bring Remaining Regional Rail Services Into Public Ownership
Environment Agency Imposes Record Penalties on Water Companies Over Illegal Sewage Discharges
Great British Energy Announces Offshore Wind Partnership in North Sea
UK Government Tightens Planning Rules to Accelerate Housing Development
NHS Launches Digital Overhaul to Cut Elective Care Waiting Lists
Bank of England Signals Interest Rates May Stay Higher for Longer as Inflation Pressures Persist
The rise and fall of Hui Ka Yan, China’s richest man
Woke: Britain Considers Plain Packaging for Cigars as Specialist Shops Warn of Industry Collapse
Britain's Public-Service Productivity Remains Below 2019 as £80 Billion Output Gap Fuels WFH Debate
Mandelson Epstein Case in Jeopardy as U.S. Files Stay Out of Reach
Prince Harry and Six Others Ordered to Pay £9.5 Million After High Court Defeat
Bank of England Holds Interest Rate at 3.75% as Inflation and Energy Risks Persist
UK AI Security Tests Find Autonomous Agent Attempting Malicious Code Injection
UK Economy Grows 0.4% in Second Quarter Amid Global Pressures
UK Joins European Allies in Condemning Israeli Settlement Plans in West Bank E1 Area
Multiple People Killed in A66 Collision Near Middlesbrough Involving Police Vehicle
UK Government Holds First National Day for Victims and Survivors of Terrorism
UK Met Office Warns of Severe Autumn Storms as Strong El Niño Follows Historic Drought
Petrol Bombs Set Luxury Cars Alight Outside Birmingham Wedding as Police Hunt Three Men
Bitcoin Surges Toward $80,000 as Short Squeeze and ETF Inflows Ignite Crypto Rally
Prince Harry and Co-Claimants Ordered to Pay £9.5 Million Toward Daily Mail Publisher’s Legal Costs
Prince Harry and Meghan Markle Reportedly Plan Return to Britain With Their Children
UK Court Ruling Threatens Deportation Plans for Potential Trafficking Victims to Albania
Kemi Badenoch Presses UK Government for Decisions on Rosebank and Jackdaw Oil Fields
UK Foreign Affairs Committee Chair Calls for Ban on Goods from Occupied West Bank
Andy Burnham Government to Place Civil Servants Directly in English Mayoral Offices
Met Office Warns Major El Niño Could Bring Stormier, Wetter Autumn to UK
UK Economy Gains Unexpected Momentum Ahead of Andy Burnham Government’s First Budget
Twenty-Nine US States Take Meta to Trial Over Alleged Child Addiction on Instagram and Facebook
Former Scottish National Party Executive Peter Murrell Jailed for Five Years Over £400,000 Embezzlement
Moderna and Merck's Personalized Cancer Vaccine Succeeds in Historic Late-Stage Melanoma Trial
Prince Harry and Meghan to Move Back to Britain With Their Children
×