Amazon on Amazon Prime

Here's what Amazon said on its Q4 conference call about Amazon Prime, its new membership program for reduced cost shipping:

To do something like Amazon Prime well, you have to have large in-stock selection. You have to have a fulfillment center network with multiple nodes so that you can have attractive shipping cost structure, and you also have to operate multi-category. Because it's probably not as worth it for a customer to pay an annual membership fee if they can only purchase in 1 product category. So there are a unique set of factors which really make Amazon.com ideally positioned to offer this kind of customer benefit. And that's really what's driving this.

(Quotes from the CCBN StreetEvents transcript.)

Quick comment:
Jeff Bezos' argument here is that Amazon's superior e-commerce infrastructure can be translated into a competitive advantage with overnight and two-day shipping, because competitors aren't efficient enough to deliver quickly. But this leads to two questions:

1. Do enough customers care about overnight and two-day shipping?
2. Why doesn't Amazon's e-commerce infrastructure provide it with cost advantages that allow it to undercut its competitors. Overstock, which outsources a growing proportion of its fulfilment, says it's consistently cheaper than Amazon.