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Can Amazon’s one-hour service give it the edge?

From Thursday Amazon is taking on the big department stores like Macy's and Wal-Mart and offering to deliver items like shampoo and batteries to shoppers in under an hour.

The service, called Amazon Prime Now, is available from 6 am to midnight, seven days a week and costs customers $7.99 in delivery charges.

Prime members in the U.S. already pay $99 a year to get quick delivery and access and access to Amazon's music and video streaming service. The Seattle-based company said there is also offering a two-hour delivery service which is free for Prime users in Manhattan.

A worker prepares packages for delivery at an Amazon warehouse in Brieselang, Germany.
Sean Gallup | Getty Images
A worker prepares packages for delivery at an Amazon warehouse in Brieselang, Germany.

"There are times when you can't make it to the store…now Prime members in Manhattan can get the items they need delivered in an hour or less," said Dave Clark, Amazon's senior vice president of worldwide operations in a press release. He added the e-commerce giant is looking to roll the feature out into additional cities in 2015.

Amazon plans to use its new building on 34th Street in Manhattan as the hub for Prime order deliveries. The location is its first physical store in its two decade-long history as it attempts to offer customers an experience similar to traditional bricks and mortar shops.

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The announcement was scant with details of logistics, but a report by the Wall Street Journal earlier this month suggested bike messengers were being employed to carry out deliveries, citing people close to the plans.

'Feeling the heat'

Amazon has been trialing a number of different ways to deliver products from storage lockers to drones as the delivery wars heat up.

Traditional retailers have joined the race for the fastest delivery with the likes of Macy's and Wal-Mart offering quick services.

Amazon, which has prided itself on cheap and quick delivery, also has to fend off challenges from other online stores. Google Express – a service that allows consumers to place an order with a partner retailer and have it delivered on the same day – announced it was expanding into new U.S. cities. Even controversial taxi app Uber has launched a same day grocery service which allows users in Washington DC to shop through the smartphone app.

Analysts said Amazon's decision to launch a one-hour delivery service was driven by pressure.

"Amazon is starting to feel the heat a little, it's becoming a defensive play," Rahul Sharma, founder of Neev Capital, told CNBC by phone.

"For the first two or three years of the web boom Amazon had it to itself. None of the mainstream retailers were responding. Those retailers are beginning to realize that they are going to keep losing sales and have come back with aggressive delivery options."