In light of eBay’s withdrawal of “Now” delivery (Same day delivery)

ebaynowAs the pressure from consumers continues to mount for same day delivery from suppliers and services providers, fast supply chain execution is coming under greater pressure. It has resulted in one of the major players in the auction arena, eBay, pulling out of the race of competing with the likes of Amazon.

All that is left of EBay’s same day delivery service is a statement on their website which says, “We have retired the eBay “Now” same-day and scheduled delivery service in the US including the eBay Brooklyn pilot program.

Remodeling supply chains and supply chain execution

It appears that eBay, who were planning to include this service in its normal website and its mobile apps, have now decided to ditch it in favor of other options such as facilitating the collection of online orders from retail outlets close to their consumers and will be remodeling their supply chains and supply chain execution programs accordingly.

EBay entered into the same day delivery arena back in 2013 when they acquired Shutl, a company that provides a one-hour delivery service over in the UK. The acquisition brought Shutl into the US marketplace where eBay used it instead of their own fleet of vehicles and drivers.

This service became one of the many instant delivery options being offered in the US, competing with other new companies entering market the likes of Amazon-Fresh and Google-Express. It meant that eBay were then also competing with service providers like Deliv, who provide so-called “last-mile” transportation services for goods ordered via shopping malls and other traditional retail outlets.

The bid to compete with Amazon

When eBay initially launched their “Now” same-day delivery they acquired a few great scalps including Best Buy, Home Depot, Macys and Target, all of whom were trying to step-up their game to compete with Amazon.

The problem for eBay and “Now” however proved to be that the combination didn’t sit comfortably with each other. The profit conscious eBay needed a same day delivery solution that was economical from the consumer point of view but that delivered the profit that they needed it to. Unfortunately for them, both goals were mutually incompatible.

The fact of the matter is that eBay doesn’t really compete in the same marketplace as companies such as Amazon and Walmart. Whereas they sell everyday commodities, eBay are more in the business of selling 1-off unique items. If they can’t do this and deliver a profit, they simply can’t survive.

It could be that eBay were enticed into offering the same-day delivery service by the acquisition in 2011 of GSI Commerce. This was seen by many as a move to bring them closer to the likes of Amazon by creating links with the more than 100 major retailers that GSI provided “back end” services for.

Redrawing the battle plans

Although the departure of eBay from the same-day delivery arena is significant, it doesn’t mean that it’s the start of a massive exodus. It’s really a matter of service providers like eBay deciding what the optimum business model includes; whether same-day delivery can be offered on a profitable basis by renegotiating deals and realigning their supply chains and supply chain execution programs as they redraw their battle plans.

Increasing market share could be Amazon’s goal

This all assumes of course that major players like Amazon are content to go on absorbing the losses that they must be making by extending same-day delivery. Of course it could be that Amazon are prepared to continue to absorb these losses content in the knowledge that they can be subsidized by other more profitable aspects of the operation (like Amazons “Prime” service which is billable to clients at £99 per annum) while they are intent on increasing market share.

Walmart are not to be forgotten

Walmart may however be in a strong position to push Amazon to the limit. The fact that they have so many retail outlets stretched right the way across the USA means that their same-day delivery costs, emanating from more local sources of supply, will help them to keep same-day costs down to a minimum.

Another one of eBay’s competitors in the same-day delivery arena is Google Express. They too may well be feeling the pinch. Like eBay Google Express do not own their inventory which means that the only way they can profit from same-day delivery is by buying and selling the service at the right levels, something that eBay found incompatible. Perhaps Google express will too, eventually?

The localized picking and packing trend

There is also a new trend among retail outlets whereby they are beginning to pick and pack products ordered over the internet from their own store shelves rather than sending them out from some central distribution hub that is distant from many consumers. This too, if the trend continues to grow, will bring more pressure on Amazon.

But this trend also has its own problems. Another consideration to take on board in the same-day delivery race is the entrance of crowd sourced transport providers the likes of Uber and Lyft. The challenges for these companies are that they must take on contract drivers in order to fulfill any additional duties, such as going into retail outlets and collecting and/or dropping off packages. It’s all additional cost that must be absorbed by their supply chains.

The battle scene is set

One thing is for sure and that is that if consumers continue to demand same-day delivery, the battle to remodel supply chains and improve supply chain execution and renegotiate costs among service providers is going to continue.

Are you a retailer and if so do you offer same-day delivery? Do you think it is the right thing to do and who should bear the cost. Surely it’s right for consumers to pay for the service – or is it potential loss of market share that drives ongoing competition and debate? 

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>