Amazon moved a distribution center near me and now I basically get what prime delivery used to get me without prime. I can still get free shipping so long as my cart total is high enough, and I think that will remain because even independent retail websites and shippers offer that, so Amazon doesn't want to give people more reason to use them less. Getting rid of prime was easier than soooooo much other stuff I've ditched.
I think it actually costs Amazon money to have separate shipping plans for prime and non-prime, and artifically holding goods later costs warehouse space. I suspect the dirty secret is that prime is no different to normal shipping now.
They constantly deliver ahead of schedule for me and I assume it's exactly because of what you said. They can deprioritize non prime shipments but at some point it just doesn't make sense, and infact costs money to not move it. Why spend wearhouse space on already sold goods when you could fill that space with things that can make you money you haven't received yet.