London Daily

Focus on the big picture.
Saturday, Dec 13, 2025

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
Ex-ICC Prosecutor Alleges UK Threatened to Withdraw Funding Over Netanyahu Arrest Warrant Bid
UK Disciplinary Tribunal Clears Carter-Ruck Lawyer of Misconduct in OneCoin Case
‘Pink Ladies’ Emerge as Prominent Face of UK Anti-Immigration Protests
Nigel Farage Says Reform UK Has Become Britain’s Largest Party as Labour Membership Falls Sharply
Google DeepMind and UK Government Launch First Automated AI Lab to Accelerate Scientific Discovery
UK Economy Falters Ahead of Budget as Growth Contracts and Confidence Wanes
Australia Approves Increased Foreign Stake in Strategic Defence Shipbuilder
Former UK Prime Minister Boris Johnson proclaims, “For Ukraine, surrendering their land would be a nightmare.”
Microsoft Challenges £2.1 Billion UK Cloud Licensing Lawsuit at Competition Tribunal
Fake Doctor in Uttar Pradesh Accused of Killing Woman After Performing YouTube-Based Surgery
Hackers Are Hiding Malware in Open-Source Tools and IDE Extensions
Traveling to USA? Homeland Security moving toward requiring foreign travelers to share social media history
UK Officials Push Back at Trump Saying European Leaders ‘Talk Too Much’ About Ukraine
UK Warns of Escalating Cyber Assault Linked to Putin’s State-Backed Operations
UK Consumer Spending Falters in November as Households Hold Back Ahead of Budget
UK Orders Fresh Review of Prince Harry’s Security Status After Formal Request
U.S. Authorises Nvidia to Sell H200 AI Chips to China Under Security Controls
Trump in Direct Assault: European Leaders Are Weak, Immigration a Disaster. Russia Is Strong and Big — and Will Win
"App recommendation" or disguised advertisement? ChatGPT Premium users are furious
"The Great Filtering": Australia Blocks Hundreds of Thousands of Minors From Social Networks
Mark Zuckerberg Pulls Back From Metaverse After $70 Billion Loss as Meta Shifts Priorities to AI
Nvidia CEO Says U.S. Data-Center Builds Take Years while China ‘Builds a Hospital in a Weekend’
Indian Airports in Turmoil as IndiGo Cancels Over a Thousand Flights, Stranding Thousands
Hollywood Industry on Edge as Netflix Secures Near-$60 Bln Loan for Warner Bros Takeover
Drugs and Assassinations: The Connection Between the Italian Mafia and Football Ultras
Hollywood megadeal: Netflix acquires Warner Bros. Discovery for 83 billion dollars
The Disregard for a Europe ‘in Danger of Erasure,’ the Shift Toward Russia: Trump’s Strategic Policy Document
Two and a Half Weeks After the Major Outage: A Cloudflare Malfunction Brings Down Multiple Sites
UK data-regulator demands urgent clarity on racial bias in police facial-recognition systems
Labour Uses Biscuits to Explain UK Debt — MPs Lean Into Social Media to Reach New Audiences
German President Lays Wreath at Coventry as UK-Germany Reaffirm Unity Against Russia’s Threat
UK Inquiry Finds Putin ‘Morally Responsible’ for 2018 Novichok Death — London Imposes Broad Sanctions on GRU
India backs down on plan to mandate government “Sanchar Saathi” app on all smartphones
King Charles Welcomes German President Steinmeier to UK in First State Visit by Berlin in 27 Years
UK Plans Major Cutback to Jury Trials as Crown Court Backlog Nears 80,000
UK Government to Significantly Limit Jury Trials in England and Wales
U.S. and U.K. Seal Drug-Pricing Deal: Britain Agrees to Pay More, U.S. Lifts Tariffs
UK Postpones Decision Yet Again on China’s Proposed Mega-Embassy in London
Head of UK Budget Watchdog Resigns After Premature Leak of Reeves’ Budget Report
Car-sharing giant Zipcar to exit UK market by end of 2025
Reports of Widespread Drone Deployment Raise Privacy and Security Questions in the UK
UK Signals Security Concerns Over China While Pursuing Stronger Trade Links
Google warns of AI “irrationality” just as Gemini 3 launch rattles markets
Top Consultancies Freeze Starting Salaries as AI Threatens ‘Pyramid’ Model
Macron Says Washington Pressuring EU to Delay Enforcement of Digital-Regulation Probes Against Meta, TikTok and X
UK’s DragonFire Laser Downs High-Speed Drones as £316m Deal Speeds Naval Deployment
UK Chancellor Rejects Claims She Misled Public on Fiscal Outlook Ahead of Budget
Starmer Defends Autumn Budget as Finance Chief Faces Accusations of Misleading Public Finances
EU Firms Struggle with 3,000-Hour Paperwork Load — While Automakers Fear De Facto 2030 Petrol Car Ban
White House launches ‘Hall of Shame’ site to publicly condemn media outlets for alleged bias
×