eBay Inc has just announced some interesting plans for the US. In a battle for supremacy with its rival Amazon, the company plans to expand its ‘Now’ same day delivery service.
Currently, eBay Now delivers products from major US retailers such as Best Buy, Target and Walgreen in Manhattan, New York, San Jose and San Francisco. This express delivery initiative was launched last year to compete with Amazon for its share of the local online commerce market.
eBay now plans to expand its Now service to other areas in the Sates. Right now it’s looking at the Bay Area peninsula, Queens and Brooklyn New York. Later this year, the service will be extended to Dallas and Chicago and we could well see this spread to the UK and other locations outside the US in the future.
Getting closer to customers
Amazon wants to get closer to its customers and this has meant building more warehouses, or fulfilment centres. They are in close proximity to towns and cities and this makes express, same day delivery easier. However, eBay generally avoids setting up warehouses and does not have its own inventory, so how will it compete with its rivals?
Well, the answer lies in partnering with retailers so they can use their physical stores to act as mini distribution hubs and warehouses. This will help the company to get closer to consumers and enable speedy delivery for online customers.
Online immediate neighbourhood shopping: the next frontier
Amazon and eBay recognise that this is a new frontier in e-commerce. We know that a lot of retail spending occurs close to people’s homes: 75 percent in fact. What if online retailers could step in and provide for people’s immediate needs? Everyone has to pop to the local shops at some point, be it for cleaning products, toiletries or groceries. Both eBay and Amazon want to step in and fulfill consumers’ requirements.
J.P. Morgan estimates that the market for online immediate neighbourhood shopping in the States is potentially worth $2 trillion per year! The analysts from J.P Morgan agree that if companies such as eBay can deliver products such as groceries, health and beauty products and household products quickly enough, they can grab a much larger share of the market.
Google getting a slice of the action with Google Shopping Express trial
Internet giant Google is also pursuing this opportunity to grow through immediate online neighbourhood shopping with its Google Shopping Express trial. Interestingly, US eBay retailer Palo Alto Toy & Sport has been part of this test and is set to see 5 percent of its sales come through Google Shopping Express this year. It has been a way for them to go above and beyond what Amazon can offer consumers.
It is likely that retailers who use Google Shipping Express or eBay Now can land orders that would have previously gone to their rival Amazon. Nevertheless, the delivery needs to be quick: faster than Amazon. Amazon doesn’t have physical stores near to its customers, but some eBay retailers do! So, this gives them a head start.
Collaboration is the way forward
For eBay Now to be effective, it takes cooperation. Same-day delivery works better when orders are consolidated from different stores within close proximity of one another. John Donahoe, eBay’s Chief Executive, has rightly pointed out that it won’t work if a retailer tries to go it alone. In the US, the delivery charges for eBay Now orders over $25.00 is $5.00. This sounds extremely reasonable and competitive. Nevertheless, Wall Street is sceptical as to whether eBay can profit from this service.
John Donahoe says that the solution lies in scale and density. If 20 retailers in the same area get 300 orders a day, the overheads can be minimised. It’s a collaborative approach which aims to see everyone being a winner.
Currently, eBay uses its own couriers in the US and they can sometimes sit idle through most of the day. So, why not use outside companies who are already making numerous deliveries within the same area?
Have your say!
eBay executives have already mentioned that they can see this new approach to the online, immediate neighbourhood shopping spread to other countries. Do you think your eBay business could benefit from this approach?
