http://www.businessweek.com/articles/2012-08-10/ebay-and-amazon-eye-same-day-delivery

E-Commerce

EBay and Amazon Eye Same-Day Delivery


EBay and Amazon Eye Same-Day Delivery

Photograph by Joshua Lott/Bloomberg

Getting a new music CD or a cup of coffee delivered to your door within the hour was one of the things that made the Internet seem so amazing back in the late ’90s. Then, of course, it turned out the Net wasn’t able to revoke the laws of business physics, and delivery services such as Kozmo.com and Urban Fetch blew up. Now, the two giants of Web retailing are giving same-day delivery another try. But they’re taking very different approaches, and it remains to be seen whether the services will scale up beyond a few cities.

Earlier this week, EBay (EBAY) invited select San Francisco customers to sample EBay Now—a shopping app that boasts same-day delivery. Bay Area residents who have received an invite will be able to download the app to their Apple (AAPL) iPhones and iPads. All of the products featured will be new and sold directly by local stores, including Target (TGT), Nordstrom (JWN), and Walgreens (WAG). Once you hit the “Bring It” button, your personal EBay shopping valet will pick up and deliver the item to wherever you are—the office, home, coffee shop. The Web auction house will waive the delivery fee for your first three purchases (which can’t cost less than $25), after which point a $5 surcharge will be tacked on. The beta pilot is only meant to gauge whether there’s an appetite. “Same-day services are satisfying both the convenient need of online shopping and immediacy factor of offline,” says Scot Wingo, chief executive officer of ChannelAdvisor, a global e-commerce software provider.

Amazon.com (AMZN) already offers limited same-day delivery. Shoppers who have signed up for a $79-a-year Prime account can get it on eligible items for $3.99 in 10 metro areas, including Chicago, New York, and Seattle. Retail experts speculate Amazon could roll out a more extensive same-day model, coupled with a change in its sales tax policy. The Seattle-based company has avoided having a physical presence in states that require e-tailers to charge sales tax. That has kept prices low but made same-day delivery in those places almost impossible. Under mounting political pressure, Amazon has agreed with several states to do that in return for tax credits to build warehouses near metropolitan hubs, according to a Financial Times investigation. An Amazon spokeswoman declined to comment.

There’s an additional competitive dynamic behind the same-day strategies of the two online megastores. Amazon fulfills its orders from its own distribution warehouses, whereas EBay aggregates retailers, providing customers with a single interface to access them. Companies that view Amazon as a competitor might see EBay as a platform to reach online shoppers. And because these conventional retailers are naturally located close to their customers, EBay has an initial advantage in providing instant delivery. June Hayford, chief operating officer and co-founder of Courierboard.com, an online network for courier providers, says same-day delivery is “complicated but definitely possible” if it’s in a densely populated area, there’s a high volume of demand, and people are willing to pay extra.

Meanwhile, two startups—Postmates and Instacart—launched this summer in San Francisco, promising delivery within an hour on everything from groceries to business supplies. It remains to be seen if they will fare any better than their dot-com predecessors.

Walsh is a Bloomberg Businessweek contributor.

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