Ebay (NASDAQ:EBAY) plans to expand its delivery service, eBay Now, to Chicago and Dallas this summer.
The service, which is already available in San Francisco, San Jose and Manhattan, will also extend its reach in those areas—down the San Francisco peninsula in California and to Queens and Brooklyn in New York.
Along with the geographical expansion, eBay is adding an app for Android phones to the iPhone app used for ordering in the original tests of the delivery service. More significantly, items can now also be ordered for delivery through a mobile website, now.ebay.com, which makes eBay Now accessible to any customer with a smartphone and an eBay account.
Depending on customer location, the delivery service is available for purchases from Macy's, Target, Walgreens, Best Buy, Home Depot, Office Depot, ToysRUs and hundreds of other stores. Ordering is through the app or mobile site, and that makes it somewhat less retailer-friendly. The customer finds products through the search function, which means searching for "walgreens" will bring up Walgreens store-brand products, while searching for "best buy" brings up products from Barnes & Noble, ToysRUs and Target before the first item from Best Buy appears.
What eBay didn't explicitly say in announcing the eBay Now expansion is what deliveries will cost going forward. Nine months after the project first began, eBay has collected lots of data and practical experience connected with same-day delivery. But at $5 per delivery, it hasn't collected nearly enough revenue to make the service profitable—or financially sustainable.
That said, now that the outlines of the service are clearer, eBay Now may have a different set of goals in mind. If eBay can establish itself as the default quick-delivery service for big retailers, that could make it harder for any competitors to come into the game—and, just as important, harder for retail chains to see their way clear to set up their own delivery services.
In addition, it could position eBay as the anti-Amazon (NASDAQ:AMZN) in the eyes of retailers—instead of competing with us, eBay is our partner, right?—and also set up the opportunity for eBay to collect fees from retailers so they can get better positioning in eBay Now's search results. If that's the plan, $5 deliveries might be worth the investment for eBay for quite a while yet.
- See this eBay announcement
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