EBay beats Amazon to same-day delivery
The auction giant is testing the service in San Francisco. Is this the future of online retail?
Same-day shipping, a holy grail of online retail, is a hot area of interest for eBay (EBAY) and Amazon (AMZN). Both companies appear to be locked in a tight race to offer same-day shipping on some items.
EBay has launched "eBay Now", a service that provides $5 same-day shipping on products from local stores such as Macy's (M), Best Buy (BBY) and Target (TGT). For now, the service is only available to select San Francisco, Calif., residents.
Amazon is rumored to be working on a same-day shipping setup of its own. The company has been making deals with state governments to collect sales tax on purchases -- often a necessary step before it can build distribution centers in those states. Those warehouses could allow the retailer to offer same-day shipping, despite recent comments from chief financial officer Tom Szkutak claiming that the company does not see a way to do same-day delivery on a broad scale.
Amazon already offers competitive shipping rates with Amazon Prime, a service that provides free two-day delivery and $3.99 next-day delivery for $79 a year.
According to TechCrunch, same-day delivery may not make sense for either company as expenses alone could cause both Amazon and eBay to reconsider the idea.
"The distribution network required to execute same-day service could be immensely expensive for Amazon, and even more so for the less-equipped eBay," TechCrunch reported on Sunday. "Failure to produce a reliable or affordable service could be a big waste of resources."
But online shoppers have always preferred fast delivery, and eBay's same-day shipping service has certainly raised the stakes for the competition. Consumers could be more apt to use this service over others, especially if their order arrives in as little as one hour after purchase.
Much like a cheesy delivery from Domino's Pizza (DPZ), eBay is closing in on instant consumer gratification with what appears to be a delicious deal. Whether the company can afford such a pricey venture remains to be seen.
EBay traded at $44.88 on Monday, up over 48% this year, while Amazon traded at $234.51, up nearly 36% this year.
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