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Same-Day Delivery? The Real Race is in Both Fulfilment and Delivery

Several articles are reporting of the potential shut-down of Ebay Now, Ebay’s one-hour courier service. While Ebay denies such a possibility, one wonders how viable a $5.00/one hour service really is.

Amazon, Google, Wal-Mart plus a host of others are all trying their hands at same-day delivery with each achieving some form of success and expansion.

However, don’t rule out Ebay yet. Ebay Now is based on the company’s acquisition of Milo, a local shopping start-up that lists real-time in-store product inventory for over 50,000 stores across the country; featuring over 3m products from Target, Macy’s, Best Buy, Crate & Barrel and more. Since that 2010 acquisition, Ebay has gone on to acquire UK-based Shutl, which provides a network of couriers to deliver local goods within a couple of hours of an online purchase. Together, the two companies have partnered with UK-retailer Argos to offer a Click & Collect and fulfillment solution.

Expect Ebay to tweak Ebay Now here in the US as it expands its fulfillment solutions.

While local delivery in US metropolitan locations such as New York, San Francisco and Chicago will probably remain a niche solution, delivery combined with fulfillment options will prove the winner in the same-day race as evident by Amazon’s fulfillment facility building frenzy. EBay is following suit with its seven facilities located in Kentucky; Virginia; Nevada; Ontario, Canada and Manchester, UK. Along with traditional fulfillment solutions, it offers “modular, cloud-based SAAS solutions” such as ship-from-store, in-store pickup and ship-to-store. In other words, its omnichannel solution offers quick, nimble and agile solutions for retailers in the fast changing retail industry.

For example, this past week, eBay Enterprise, an eBay company, announced it will provide regional fulfillment services for Walgreens and Paula’s Choice. Walgreens first signed with eBay Enterprise in 2011 for distributing its West Coast Drugstore.com business and then in the fall of 2012 for Walgreens.com. This renewal agreement will provide ship-to-store and direct-to-consumer West Coast order fulfillment from the eBay Enterprise fulfillment center in Reno, Nevada.

Fast growing west coast-based Paula’s Choice needed to expand its capacity and provide a location that could deliver product quickly to the east coast. As a result, it has contracted with the eBay Enterprise Shepherdsville, Kentucky facility.

“Today’s consumer expects their order quickly, hassle-free and with nominal shipping fees if any,” said Tobias Hartmann, interim president of eBay Enterprise. “Our goal is to provide retailers with warehouse and store-based fulfillment solutions that provide a competitive advantage and exceed their customers’ expectations to build long-lasting loyalty.”

Indeed, can such traditional providers of fulfillment and delivery as FedEx and UPS offer similar solutions? The use of cloud-based solutions is on the rise allowing for quicker implementation and lower costs – a benefit for retailers competing in such a competitive environment. Keeping costs down is a necessity so not only are retailers looking to keep fulfillment costs low, transportation costs are another concern. As FedEx gets set to launch its dimensional pricing in 2015 with UPS expected to follow, retailers may start to look for alternative solutions or end free and/or reduced shipping for customers. Regional delivery companies such as Eastern Connection and OnTrac are waiting in the wings.