EBay Offers the Gift of Free, Same-Day Delivery

Discussion
Nov 27, 2013

The question as to whether or not consumers will pay for same-day delivery of goods ordered online is being made moot by eBay for the holiday season. That’s because the company announced it would not charge customers for deliveries using its eBay Now service through Christmas Eve.

The service is currently available in Chicago, New York, San Jose and San Francisco. In an announcement made last month, eBay said it would expand the service to Dallas before the end of this year and add 25 more cities, including some in international markets, in 2014.

The online marketplace operator makes the move on the heels of a forecast it issued last month for the fourth-quarter that fell short of Wall Street’s expectations. The company’s share price has dropped nine percent since then.

Will free same-day delivery be a difference-maker for retailers that sell on the eBay Marketplace this holiday season? Do you think eBay will repeat the offer next year when it has rolled out eBay Now to many more cities? How do you expect competitive companies to react to the announcement?

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15 Comments on "EBay Offers the Gift of Free, Same-Day Delivery"

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Joan Treistman
BrainTrust

Why do marketers encourage shoppers to sample their products in the store? I think the concept is the same for free same-day delivery. Once people have a taste of this convenience, many (not all of course) will want to experience it regularly even at a price. Additionally, consumers who are anxious to complete their holiday shopping will want to know their purchases are on their way…another check mark against that shopping list. Of course the price value ratio for free one day delivery will further encourage more eBay purchases.

There are some calculations to be made as to the ROI and opportunity for next year. But look what’s happened with open store schedules for Thanksgiving Day. Many jump on the bandwagon, so they are not left out of the revenue stream possibilities.

Finally, this concept reminded me of a post WW I song, “How’re you going to keep them down on the farm after they’ve seen Paree?”

Ken Lonyai
BrainTrust

2013 is the year of “same day” delivery wars. A few shots have been fired across some bows and the concept is being tested, scrutinized, and evaluated carefully in different markets via different strategies.

It’s way too early to know what the real effects will be with the service – especially long term. Most likely, companies that are sucking up the costs of things like free same day delivery can’t sustain it over time. So, while it may boost gross revenues for this season, only insiders will know if it’s a good idea long term (financially).

For eBay, it clearly helps them forward their transition from garage sale merchandiser to new product marketplace, to payment solution provider, and beyond. It tells the other big guns that they are still very much in the fight. My guess is some competitors may try and match the deal, but Amazon will stick very closely to its strategy and laugh this off (Bezos style).

Paula Rosenblum
BrainTrust

I still think this is a “niche-y” service, but I’ll bet people try it just because. The key is to distract from Amazon.com, and eBay is proving itself to be a formidable competitor. So far.

W. Frank Dell II
BrainTrust

Same-day delivery is an effort to nullify a negative online shopping has versus stores. This should be viewed as a response for the reduced price advantage online retail had from not charging and collecting state sales tax. Same day delivery will and must expand to achieve critical mass and thus economies of scale. Understand, this option will only be available in cities with half a million population or more.

Bill Davis
Guest

Possibly, but think the bigger impact is the shot across the bow to traditional retailers that even same-day shipping may no longer be viewed as a defensible profit center. While I don’t think eBay will offer it as a free service all of next holiday season, they can use it strategically to drive more business their way when needed.

I think Amazon and a few others will match this in a comparable way, but 95%+ will have no meaningful response, which will be to their detriment.

Tony Orlando
BrainTrust

Free same-day delivery service is the latest tactic in the war to win over customers. I am curious to see how this blossoms, as it has to eat up the bottom line. However, once Americans get a taste of this, they will DEMAND it in the future, so good or bad, this could become commonplace by next year. No one wants to be outdone by their competition, and if free delivery is necessary for survival, than the Big Boys with the DEEP POCKETS will control most of the online retailing, as smaller business just can not afford this service. Where is the pricing going to be hidden in these costs, is what I want to see, as nothing is for free.

gordon arnold
Guest

The only thing missing is the right stuff and eBay is closing in on variety and pricing against the current leader of the pack. I am not so sure they will step into e-commerce leadership, but they will be placing more pressure on the market share of the of the big-box guys and gals for sure.

Camille P. Schuster, PhD.
BrainTrust

When Internet commerce first started, shipping was free to encourage consumers to make online purchases. They failed to realize that consumers liked the convenience enough that they would have been willing to pay shipping. Then consumers were disappointed when shipping fees were charged. Consumers who want same-day delivery would probably pay for the service. Setting an expectation of getting the service for free sets an expectation that will have to be changed. Will people use the service? Of course…it is free.

Ted Hurlbut
Guest
Ted Hurlbut
3 years 10 months ago

Free is always a pretty compelling price. And if the primary competition is Amazon Marketplace, free is a competitive leg-up, at least in the immediate term. But in the long-term, free is relatively easy to match.

Herb Sorensen
BrainTrust
Which is cheaper, to build big “boxes” in every neighborhood of the world, stock them with tens of thousands of products, the vast majority of which rarely (and some, never) sell even a single copy, and require shoppers to spend their own money to transport to the store, pick stock, and self-deliver to home or office? Or, to build really big fulfillment centers near every major metro area, with access to millions of SKUs across ALL categories, and have agents of the retailer deliver to any home or office just what the shopper wants/needs the same day? Let’s get real. Bricks retailers have seen nothing yet from online competition. Automation of fulfillment and delivery is on the far horizon, and a more scientific approach to bricks retailing is essential to any surviving bricks retailer – there will be MANY. The one impregnable position the bricks retailer has is not same-day delivery, but IMMEDIATE delivery. But they need to look at all the components of retail very carefully (1. meeting of minds/selling; 2. delivery of goods; 3. payment), or they will be progressively toast. This might help: “Selling Like Amazon… in Bricks & Mortar Stores!“ As to eBay vis-a-vis Amazon: The… Read more »
Shep Hyken
BrainTrust

Same-day delivery can be a competitive edge for some companies, provided it is cost effective for both the company and the customer. eBay is an amazing company that has defined an industry and continues to “disrupt” the norm. Their approach to this service will probably morph into something other that what it looks like today. Maybe it’s free. Maybe it costs. Regardless, it is competitive. It will be interesting to see how this plays out in the next year.

Mark Burr
Guest
3 years 10 months ago

Next day or the next 2-5 business days is a reasonable expectation for online shopping.

Retailers like Amazon and Zappos meet or beat the expectation every time from my experience.

eBay to me still says garage sale. It is not the first top-of-mind choice, and I can’t imagine it breaking through to that anytime soon.

Meeting or exceeding the reasonable expectation might be a better goal. The cost and execution may bury them. As a consumer, I’d be far better satisfied with that concept rather than taking the risk.

I would think that the overwhelming majority of online shoppers would be satisfied with simply the reverse of the “Wimpy” principle: I’d gladly pay you today for my package tomorrow.

Jesse Karp
Guest
Jesse Karp
3 years 10 months ago

This is a clear promotion for what is yet to come for eBay as they roll out the service across many cities. Just as Amazon Prime’s free 2 day shipping has captured the hearts (and wallets) of customers, 1-day shipping will be that much more enticing. Undoubtedly Amazon is already working on something like this and some companies have already had this in the works for some time, such as Zappos.

It will be interesting to see if the long game pays off for eBay with this move and if it actually converts customers into loyal ones, or if it is just the first step of an inevitable “shipping” war.

It very well may end up that all the retailers will be locked into free same day delivery and the only true winner will be the customer.

Dan Frechtling
BrainTrust

eBay sellers need a catalyst, as revenue on that marketplace is growing slower than analyst expectations and slower than Amazon’s marketplace. Google’s entry into same-day shipping opens a new competitive front.

eBay merchant same-store sales are increasing at 1/3 the level that they are on Amazon (12% vs. 35% in the most recent 2-week period according to ChannelAdvisor)

eBay’s move will certainly improve purchase conversion. But eBay needs to improve traffic to make a bigger dent. This will come from smart marketing of this promotion and flawless service that keeps visitors coming back.

At the end of the day, the eBay-Amazon-Google marketplace battle helps small businesses in the short term but makes them more dependent on these channels in the long term.

Alexander Rink
BrainTrust
3 years 10 months ago

I think same-day delivery will be a difference-maker for eBay, but as others have commented before, I also think offering same-day delivery can be risky. Yes, it gets consumers to try the service, like it, and then maybe pay for it, but at the same time, it may also lead to an expectation of free same-day delivery that could generate some backlash when they start charging for it. There is also the possibility of some consumer confusion between what qualifies for free delivery and what does not.

With Amazon already implementing initiatives in this area, I think it is fair to assume that the competition will start making similar moves.

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