Amazon to shut down speedy brick-and-mortar delivery service

Amazon is shutting down a service that offers same-day delivery from mall and brick-and-mortar retailers, CNBC has learned.

The company has stopped any new development of the service, called Amazon Today, and will begin to wind it down, according to two people with knowledge of the matter. The people asked not to be named because they were not authorized to speak to the press.

The bulk of the program will be shut down by Dec. 2, the people said. Select retail partners will be able to continue fulfilling orders with Amazon Today through Jan. 24, 2025, Amazon told CNBC.

A small amount of employees will be laid off and provided with severance, while others will be transitioned to other positions within Amazon, the company said.

Employees who work on Amazon Today learned the news in a meeting on Monday, where some staffers were informed they would be laid off, the people said. Roughly 300 employees were working on Amazon Today, the people said.

The closure of Amazon Today is the latest example of the company’s broader cost-cutting efforts.

Since 2022, Amazon CEO Andy Jassy has been on a campaign to cut costs across the company in order to meet rapidly changing macro conditions. Beginning in 2022 and extending through 2024, Amazon initiated the largest layoffs in its history, cutting more than 27,000 jobs. Jassy has taken a harder line on the company’s unproven, costlier bets than his predecessor, Amazon founder Jeff Bezos. Jassy has axed several projects, including a telehealth service, video-calling device for kids and a roving Treasure Truck.

Launched in 2022, Amazon Today allows retailers who sell on Amazon to offer speedy delivery from their brick-and-mortar stores and shopping malls in select cities. Amazon’s contracted Flex drivers, which make deliveries using their own vehicles, fetch the packages and drop them at customers’ doorsteps within hours of when the orders were placed.

Amazon Today was part of the company’s push to get online purchases to shoppers’ doorsteps at faster speeds. Amazon continues to add more facilities focused on same-day deliveries in a bid to boost sales and compete with other companies that provide ultrafast delivery. That includes Instacart and DoorDash, which have expanded beyond food and groceries and into retail.

The company had signed up several retailers to Amazon Today, according to the program’s website. That list included Office Depot; Staples; Petco; PacSun; vitamin and dietary supplement chain GNC; and Fabletics, the athletic-wear brand owned by actress Kate Hudson.

Amazon is working with the retailers it signed up for the service to ensure a smooth transition for them, the company said. Amazon added that it continues to prioritize and invest in fast delivery.

The decision to shutter Amazon Today comes as a surprise since Amazon was in the process of onboarding other retailers, one of the people said. The company was also pitching the service to more retailers at a conference last week.

The service skewed more costly than traditional delivery routes where Flex drivers can fill their cars up with packages from an Amazon warehouse, one of the people said. Amazon Today routes, which the company calls “retail deliveries,” did not usually fill up a driver’s trunk, making the program less worthwhile for the Flex contractors.