Partner Article

Amazon and eBay to Trial Same-Day Delivery

It’s more than a decade since Kozmo.com collapsed, but you’d be forgiven for not knowing who they were, as the business was short lived. It opened in 1998, promising to deliver a variety of products, including food, DVDs and magazines within the hour to residential locations in major US cities. They didn’t charge a delivery fee, even on a $0.50 item, and that was their downfall. It was a great idea, and was popular among the faithful, but they made huge losses. It simply wasn’t a viable business plan, as delivery costs alone could easily exceed the price a customer paid. The story of Kozmo.com’s downfall is a well-known example of the 2000 dot-com crash, in which online-based businesses had initially experienced excellent growth before declining rapidly.

The business model hasn’t been tried on a large scale since, but interest is now growing, as consumers want more from internet businesses, and next day just isn’t quick enough. Both eBay and Amazon have recently begun testing a system whereby shoppers can buy selected items and have them delivered the same day. Unlike Kozmo.com, Delivery fees will almost certainly apply after an introductory period, but this is seen as something that customers are willing to pay. It’s only being trialled in select US cities, but if successful, could be seen all over the world.

Clearly, eBay are not offering the service for smaller sellers – it is only the larger and more established businesses that will be able to meet the demands. eBay is seen to have an advantage in that it offers a central platform for shoppers to buy from retailers, rather than being one itself, so it doesn’t have its own warehouses. This means that distribution is more spread out and located potentially closer to customers.

Amazon does in fact already offer same day delivery to a certain degree. Customers who have the Amazon Prime account can pay a relatively small fee to have a select few products delivered the same day in ten US cities. The new scheme will attempt to find out if there is a more general demand for the service.

Currently, if you want something the same day, then you need to use a same day courier service, which is great between businesses or person to person, but it’s not usually something offered by online stores.

Success will almost certainly hinge on the specific products and the size of the range that the two companies will be able to provide. The key is finding out which products people really want quickly, and some items would simply not be feasible for same day delivery. It could take off in a big way if it proves popular, but with the logistics being both complicated and expensive, a lot of people will have to get excited about the scheme for it to stick. The two companies will be wary of a failed idea, so don’t expect the service to be anything but a ‘test’ for a while yet.

This was posted in Bdaily's Members' News section by Jack .