Amazon will deliver within an hour - for a price

Amazoncustomers in the UK will soon be able to get their hands on deliveries within an hour of ordering their items. The service, which is called Prime Now, first launched in Manhattan in December last year. It has since expanded to Atlanta, Austin, Baltimore, Brooklyn, Dallas and Miami, and has now arrived in the UK. There are, however, a raft of restrictions.

Not everything on the site will be included in the service. There are over ten thousand items available for Prime Now delivery - but that still leaves millions of others that you'll have to wait for.

The service is up and running already, but only within zone 1 in London. In practice this means people who work in the centre can order at their desk, and have their items delivered to the office . By the end of the year, Amazon says it will extend the service to the rest of the UK.

The cost
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Unsurprisingly there's quite a price tag attached to this convenience. It's only available to Prime customers, so to qualify for the service you'll need to spend £60 for an annual membership. In addition, you'll get access to free next day delivery, secure unlimited photo storage, and the Prime Instant Video service. To use the one-hour delivery option, you'll need to have spent more than £20, and pay an additional £6.99.

Alternatively, Prime members will be able to get free two-hour delivery between 8am and midnight, seven days a week.

And at the moment, those who are eligible can enter LONDONOW at the checkout in order to get £20 off their first order through the Prime Now app.

Changing strategy

The launch of Prime Now is just the latest in a long line of changes Amazon has been making to its delivery model.

In the past it struggled with the fact that it was having to absorb rising postage costs, so that each purchase was making the company less and less money. This was exacerbated by the fact that the distribution centres were placed at a huge distance in order to be as tax-effective as possible for the business.

In 2012, however, the strategy shifted. Amazon bowed to pressure to pay more tax and took the opportunity to shift distribution next to major metropolitan centres. In order to remain profitable, it then had to stop absorbing postage costs.

It introduced a minimum purchase amount required to qualify for free delivery - and in May this year it doubled that to £20 (unless you're buying at least £10 of books).

It is also working had to persuade people to sign up for Prime. It has spent more that $1 billion on content for its video streaming service, and invested in delivery innovations from drones to delivering to car boots. This latest announcement should persuade another group of people that the extra convenience is worth the money.

The additional benefit of Prime membership (as far as Amazon is concerned) is that once people have signed up, Amazon will be their first choice of retailer. Shoppers calculate that the more they order from Amazon, the less each individual delivery has cost them, which gives Amazon a head start in an incredibly competitive environment.

The impact

For shoppers who favour other stores, one interesting knock-on effect of Amazon's change in strategy is that others are changing to compete with them.

In the US, Google is offering one hour delivery within San Francisco, eBay is offering it in San Francisco and New York, and other start ups are powering one hour delivery in cities ranging from Seattle to Chicago and Palo Alto. eBay has also said it's looking at expanding its service to London.

But what do you think? Do you need deliveries so fast? And are you willing to pay for it? Let us know in the comments.

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