eBay shuts down same-day delivery service

eBay Inc. said yesterday that it will shutter its "eBay Now" same-day delivery service as the online auction giant continues retreating from a fulfillment fight with e-tailer Amazon.com Inc.

Last week, eBay sold off its fulfillment arm, eBay Enterprise, to a group of private-equity firms for $925 million. By shedding an e-commerce software platform and nine distribution centers in the U.S., Canada, and the U.K., eBay is returning to its roots of hosting a virtual marketplace instead of managing brick-and-mortar warehouses.

eBay Now began as a "store to door" local shopping app promising customers one-hour delivery from local stores to their homes. The company ran a pilot program in markets such as San Francisco, New York, Chicago, and Dallas. Despite seeing "encouraging results," the San Jose, Calif., company closed down its related eBay Now app in December, according to a statement from eBay chief product officer R.J. Pittman.

Pittman framed yesterday's announcement as a way for eBay to reduce its dependency on a separate standalone delivery service, and said the company was looking to outsource the delivery of Web-ordered items.

"We are now exploring delivery and pick-up/drop-off programs that are relevant to many more of our 25 million sellers, and that cover a wider variety of inventory that consumers tell us they want," Pittman said in a release.

eBay will continue to operate a similar system in the U.K., providing "scheduled delivery" service to its British customers through Shutl Ltd., a same-day delivery firm it acquired in 2013.

In related news, the company also revealed Tuesday that it will retire three of its special-purpose "vertical" mobile apps—including eBay Valet, Fashion, and Motors—and migrate their functions into the flagship eBay app.

The moves all align with the company's goal of playing to its strength as a virtual auction house instead of going head-to-head with Amazon, which has been complementing its large regional distribution centers by building urban DCs near its biggest markets, said one market watcher.

"For Amazon, offering rapid delivery services is a competitive advantage since they stock product. eBay is more of a platform for others to sell their products, and it does not keep inventory," said John Santagate, research manager for supply chain execution at IDC Manufacturing Insights, an analyst group based in Framingham, Mass.

eBay will likely continue to offer premium, rapid delivery as a third-party option in each deal between sellers and buyers. However, fulfillment will no longer be a core service for the company.

"For fulfillment to be a competitive advantage for eBay, they would have to have stock and fulfill inventory from their own fulfillment centers," Santagate said. "I think for what eBay is—a platform for buyers and sellers of more unique items—that rapid delivery does not necessarily provide a value to either. The value is in the ability to buy hard-to-find items."