eBay Inc (NASDAQ:EBAY) has announced an expansion of its eBay Now service, which offers same-day delivery. The move takes direct aim at Amazon.com, Inc. (NASDAQ:AMZN) as eBay pushes back against the dominant online retailer.
eBay expands Now service
Last year the company launched its Now service, which offered delivery from various stores like Target, Best Buy and Walgreens in as little as 60 minutes. It was initially offered in Manhattan, San Jose and San Francisco, but Reuters’ Alistair Barr reports that eBay Inc (NASDAQ:EBAY) said it will expand the Now Service to the Brooklyn and Queen areas of New York City and also the Bay Area peninsula between San Jose and San Francisco. The company plans to add Dallas and Chicago later this summer and possibly expand it outside the U.S. at some point in the future.
eBay stands apart from Amazon
eBay Inc (NASDAQ:EBAY) doesn’t run its own warehouses like Amazon.com, Inc. (NASDAQ:AMZN) does, so they won’t be direct competitors. However, they are addressing the same issue in two different ways.
Amazon announced recently that it was in the process of building more warehouses to bring its storage facilities closer to even more customers, thus shortening delivery times. eBay, on the other hand, is growing a network of stores in various cities which will all act as its own distribution centers—without the cost of actually running the facilities.
Other retailers getting in on same-day deliveries
Google Inc (NASDAQ:GOOG) is also testing same-day delivery in the San Francisco area, although it isn’t just online retailers which are attempting to move into fast deliveries. Wal-Mart Stores, Inc. (NYSE:WMT) is also testing same-day delivery in a few cities through its Walmart to Go service.
One of the reasons Amazon’s sales have been so strong is because of its shortened delivery times, so if other retailers can offer similar or better delivery times, they could take a chunk out of the online giant’s sales.
eBay may continue to struggle
Currently eBay Inc (NASDAQ:EBAY) charges $5 for quick deliveries for orders more than $25. For the same price, Amazon does not charge delivery costs, and subscribers of Amazon’s Prime service never pay delivery charges for items that ship from one of its warehouses.
Wall Street analysts are unsure if eBay will be able to profit from its Now service, although eBay Chief Executive Officer John Donahoe told Reuters that they would focus on scale and density. He said by consolidating 20 retailers and getting 200 to 300 deliveries every day in one area, the cost of the service is lowered.
Although eBay is using its own delivery personnel, it is testing the use of other couriers, which some analysts say could further lower the cost of the service.