This Latest Amazon Prime Feature Might Revolutionize the Experience

Have you ever found yourself in the scenario outlined in a recent Amazon ( AMZN ) press statement?

"You make a purchase on Amazon, only to remember something else you need... It could be just minutes later, or even several hours. Regardless, you wish it could arrive together with your previous order."

This is a situation I encounter constantly. Previously, when this happened, my only choices were to accept it, get dressed, and visit a nearby store to pick up the item—or simply go without.

But now, Amazon has introduced a new Prime feature called Add to Delivery. This not only addresses the issue, but it may also significantly enhance Amazon's e-commerce profits. Here’s what investors should be aware of.

Prime time

Indeed, U.S. Prime subscribers now have the option to include additional products in an upcoming delivery with just one tap on their mobile device. This function—available through the Amazon Shopping app and mobile site—lets you select "Add to today's delivery" (or "tomorrow's," or whichever applies) to quickly attach eligible items to your next scheduled shipment. While this may seem like a minor upgrade, it has the potential for substantial impact.

Studies indicate that most American online shoppers begin their product searches on Amazon. Therefore, if users need something urgently, they typically check Amazon first to see if Prime can deliver it the same or next day. If Prime can’t meet the timeline, many won’t even consider other online retailers.

This is largely because Amazon Prime is known for its fast (and free) shipping. Many customers—including myself—assume no other service can match Prime’s speed or cost.

And that assumption is usually correct. Amazon’s extensive logistics network and proprietary delivery system allow it to avoid depending on third-party shippers for quick deliveries. If Amazon can’t get an item to you by the next day, chances are no other online retailer can either.

The alternative is to source the item locally. This might involve ordering from a competitor like Target or Walmart for in-store pickup, a service Amazon generally doesn’t provide for most products.

How it could boost revenue

It’s estimated that a typical Amazon shopper places between 70 and 75 orders annually, which averages out to a delivery about every five days. This means that, statistically, an Amazon customer is expecting a package within the next two days just under half the time.

Prime members, however, tend to buy even more frequently—Amazon reports nearly 100 orders per member in 2024—so they’re more likely than not to have a delivery scheduled within 48 hours. In 2024, Prime members made up between two-thirds and three-quarters of all U.S. Amazon customers, totaling around 200 million people.

If this new feature leads to just $5 in additional net sales per Prime member each year, that would result in $1 billion in extra net revenue. The nature of this revenue is also crucial.

How it could boost earnings

Amazon’s online retail business operates with very slim profit margins. Most of its North American e-commerce net sales—excluding the cost of goods—are consumed by operating costs. In 2023, Amazon generated $352.8 billion in North American e-commerce sales, with about 95.5% ($338 billion) spent on operations. In 2024, $387.5 billion in net sales saw 93.5% (roughly $362.5 billion) go toward operating expenses.

However, adding more items to an existing order incurs almost no extra cost for Amazon. The company would already be paying for the delivery (driver wages, fuel, etc.), so unless the added items are unusually large and take up too much space (which Amazon likely wouldn’t allow), most of the extra revenue from these add-ons would go straight to profit.

So, if Add to Delivery increases net revenue by $1 billion as projected, that would mean a 4% boost to the North American e-commerce division’s current $25 billion profit. If net revenue rose by 1%, or $3.6 billion (an optimistic scenario), the bottom line could jump by 14.4%.

Even if you wouldn’t call a double-digit profit increase a “game changer,” it’s clear that this seemingly small feature could have a major impact on earnings.