eBay Moves Into Amazon Prime Territory

By Carol Kopp  AUG 07, 2012 9:00 AM

Two-day delivery? Pah. eBay can get it to you faster.

 


MINYANVILLE ORIGINAL Remember that brief shining moment when any Manhattan dweller could tap a few keys and make a bicyclist appear within an hour, toting a video and a pint of still-frozen Haagen-Dazs? It was brief, and it was shining, because that was the very moment that the Internet bubble blew up in our faces.
 
Now it’s time to try for instant shopper gratification again, or as near instant as is possible while allowing for a decent profit. This time, the delivery guy will probably be from either eBay (EBAY) or Amazon (AMZN). 
 
A pilot project called eBay Now, introduced this week in San Francisco, allows a customer to download an app to an Apple (AAPL) device, make a purchase, and hit a “Bring It” button. That sends the order to a courier service, which then picks up the goods at a brick-and-mortar store and delivers them that day. eBay’s own PayPal service is used for payments.
 
Meanwhile, after some experimenting, Amazon has said that it doesn’t believe it can make same-day delivery economical on a broad scale. Some analysts have speculated that even its existing Prime service is a money-loser, as its subscribers don’t need to worry about combining items to save on shipping.
 
However, Amazon already has an extensive network of regional warehouses to make its shipping faster and more efficient; recently it has been picking locations closer to metropolitan areas. Some see this as a signal that it might dabble in “instant shopper gratification” in some areas, or at least speed up its Prime delivery in urban areas.
 
On the other hand, eBay is not building warehouses. Why mess with its time-tested role as the hands-off middleman? Instead, it is partnering with a bunch of big names that have good reason to try to compete with Amazonian convenience: Brick-and-mortar retailers. The San Francisco test retailers include Best Buy (BBY), Macy’s (M), Nordstrom (JWN), Target (TGT), Walgreen (WAG), Crate & Barrel, Fry’s Electronics, and Toys ‘R’ Us.
 
From the start, eBay is avoiding the worst excesses of the dot-com boom. For the beta test, the minimum order is $25. There’s a $5 delivery charge after the sign-up bonus of three free deliveries. By comparison, Amazon charges $79 per year for Prime membership, which includes free two-day delivery on eligible items, and $3.99 extra for overnight delivery.
 
TechCrunch notes that at least two smaller startups have entered this space: Instacart, which was founded by a former Amazon supply chain guy; and Postmates, a business-to-business delivery service that is experimenting with the consumer side.
 
Oddly, eBay, Instacart, and Postmates all are operating their tests out of San Francisco. This flies in the face of evidence that Manhattan is the ideal location, given its vast population of bicycle delivery folks working for peanuts. However, San Francisco has similarly solid credentials as a hotbed of hipsters devoted to home delivery.
No positions in stocks mentioned.

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