EBay (NASDAQ:EBAY) is expanding its eBay Now same-day delivery service to shoppers on the web, according to VentureBeat.
Adding web orders expands the pool of potential eBay Now customers, though probably not dramatically. The company has been taking delivery orders through its mobile app for a year, and fulfilling them by collecting merchandise at major retailers including Macy's (NYSE:M), Home Depot (NYSE:HD) and Walgreens (NYSE:WAG). EBay charges $5 for a delivery that typically takes a little over an hour, with a $25 minimum order—and it's eBay, not the retailer, who the customer sees as the retailer. EBay also plans to include eBay Marketplace sellers in the delivery service by the end of the year if they're in the same locale as the customer.
If the economics of that don't seem to make sense, it's increasingly clear that near-term profit isn't what eBay is concerned about. The company is just hoping to outflank Amazon (NASDAQ:AMZN), which has expanded its same-day grocery delivery business into Los Angeles and is expected to do much more same-day delivery in the future, using its network of distribution centers.
Ironically, eBay's profit-be-damned delivery expansion is cribbed from Amazon's own original playbook, when Amazon had no warehouses or inventory of its own—it simply took orders and then forwarded them to book publishers. Because Amazon also promised to discount every book it sold, that meant some sales were at a loss, but every sale built volume.
That seems to be eBay's approach. As with the early Amazon, financial analysts are asking whether this can ever be profitable. But as grocers doing same-day delivery in the U.K. have found, the key to reaching break-even is getting enough orders on each truck for each delivery run. Since eBay has almost no capital investment in delivery compared to either Amazon or the retailers it buys from, it can walk away from a failed experiment as quickly as it can sell off a small fleet of delivery trucks.
But if it can get a foothold as the defacto fast-delivery service for retailers before Amazon can get established, it could lock in retailers—and lock out Amazon.
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