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eBay to online retailers: Delivery time the only way to compete with Amazon

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26th Jun 2014
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eBay is betting big on its new delivery solution, Shutl. Having recently seen the same-day shipping service it launched into 4 US cities, eBay Now, stutter after its 2012 launch, the world’s leading internet auction site turned to London-based start-up Shutl late last year, and is now telling ecommerce leaders that they should jump on board, or risk being forced out of business by Amazon.com.

At the eTail Europe conference in London this week, eBay’s head of engineering for local delivery, Sam Philips explained that shipping had now become the number one pain-point for online shoppers, and that slow and inefficient delivery was often causing consumers to turn away from ecommerce sites.

“While ecommerce is accepted by the masses and it works, the distribution sucks,” he said. “The best delivery you can get in the UK currently is next day, while in the US it’s two days. For the customer that’s a real problem.

“90% of shoppers who use an ecommerce site say that delivery is the biggest annoyance. That’s 9 out of 10 people. We all know the statistic that 67% of people who go through to a site don’t convert, but when surveyed we found that two-thirds of those cite delivery time as a reason for abandoning their cart. They don’t trust delivery; they don’t believe the delivery meets their requirements.

“Delivery matters. It matters firstly, because it’s the final interaction we have with a customer, and because as an ecommerce company you’re giving this final word away to a logistics company. That’s your last chance to interact with the customer, and it’s the thing they’re most worried about. And then it matters secondly because of the elephant in the room.”

The elephant in the room Philips refers to is Amazon.com, which he stated is now widely regarded at eBay as “an existential threat to physical commerce”.

Amazon, he said, were so dominant as a retailer that they were currently “destroying” other ecommerce providers on certain variables, especially those that still maintained a physical presence as well as online, such as Walmart:

“They’re [Walmart] the largest ecommerce player with a physical footprint, yet Amazon is still destroying them on price and range, and they’re not running out of room anytime soon. While Walmart is putting stores near its customers, Amazon is putting their stock where land and labour is cheapest, and that builds them a massive price advantage. Up to 20% on price. That’s huge.”

Prior to acquisition by eBay, Philips was himself a Shutl employee and believes the service, which aggregates and connects online retailers with local same-day couriers to create same-day delivery times, offers an experience that even Amazon might struggle to match.

“Our fastest delivery time is 13 minutes and 57 seconds [in Aberdeen] from ordering to holding your item in your hand. That’s something that Amazon can’t do. That’s something that eBay is going to enable retailers to do.”

How easily eBay can convince internet retailers to implement the service remains to be seen. Shutl is currently only available in the UK and is widely-regarded as London-centric, although plans are in place to expand out into the US (to drive the eBay Now service), then Australia and the rest of Europe.

One of the chief benefits is that retailers can still maintain control of their own warehousing and as Philips stated, “offer Shutl directly on their website, advertise it and take advantage of the benefits it brings”. If it does prove to be as unrestrictive and efficient as eBay claims, ecommerce providers may yet view it as the viable alternative to joining the growing inevitability that Abe Garver calls FBB – Fulfillment By Bezos.   

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