So much for eBay’s same-day delivery

EBay had grand plans to become one of the fastest retail delivery services on the Internet, zipping electronics, food and toiletries to your front door in an hour or less.

But sometimes best-laid plans and the economics of the low-margin retail business don’t agree.

More than two years after launching eBay Now, an on-demand shopping service that promised delivery in about an hour, the app has been pulled from the app store, a sign that the San Jose-based company is rethinking its same-day delivery business. Consumers with the app on their phones or tablets are redirected to the eBay website, where the service has been folded inside eBay’s core ecommerce business. eBay Now is no longer a standalone app — most likely, because the demand wasn’t there, and neither was the revenue.

On eBay Now, consumers could order from a very limited selection of items from a very limited number of retailers — among them were Walgreens, Office Depot and Target — and an eBay-hired valet would buy the chosen items and deliver them to the shopper’s front door. Much of the time, the service worked as it should, with eBay Now shoppers quickly delivering items of urgent need — a charger for a dying iPhone or baby formula for the mom who just realized she’s all out.

Analysts said eBay was losing money on eBay Now, but that the service was an experiment to test consumer demand for same-day delivery, and complemented eBay’s vision of helping brick-and-mortar retailers better reach online shoppers. The economics didn’t add up — a delivery on eBay Now cost $5; eBay paid hourly wages and travel expenses for the contract workers hired to do the shopping and driving.

Last year during the holidays, the company offered free delivery through Christmas Eve.

The service first launched in San Francisco and later expanded into San Jose, the  Peninsula, Manhattan, New York, Dallas and Chicago. But some of those launch dates were delayed without explanation, and further plans to expand to 25 markets by the end of this year seemed to dissolve. Reports of an eBay shutdown first swirled in June, but the company denied any plans to take the service offline.

As Venture Beat reported, last spring, “eBay quietly fired its team of “valets,” and transferred its deliveries to third-party couriers, a shift enabled by the company’s earlier acquisition of Shutl. Simultaneously, eBay’s director of local commerce and East Coast operations head departed.”

eBay Now’s demise doesn’t bode well for the ecommerce giant, which recently spun off its most lucrative business, PayPal, into a separate entity. The demand for same-day delivery has only grown as more consumers shop online, and Amazon’s robust fulfillment operations have raised the expectations of consumers that they can get (mostly) whatever they want (mostly) when they want it. eBay is also facing more competition from Google Shopping Express, which launched in the Bay Area in September 2013 and delivers from more retailers. eBay Now’s business model, which took a more personal approach to delivery, fulfilling one order at a time and delivering to parks, bars and restaurants — or wherever the consumer asked — likely wasn’t one the company could scale.

Photo: EBay Now valet Audrey Zupancic shops at Office Depot to fill an order on Thursday, April 18, 2013 in San Francisco. Valets buy products from area stores for clients and deliver them in about one hour. (Aric Crabb/Bay Area News Group)

 

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