eBay Retools Local Delivery Push in Renewed Bet on Retail

eBay Inc is retooling its local delivery program and extending more logistics options to smaller merchants that make up the bulk of the e-commerce giant's sprawling base of marketplace sellers, an executive said on Wednesday.

More of eBay's smaller sellers, including some with annual sales under $100,000 (roughly Rs. 62 lakhs), will allow shoppers to buy items online that can be picked up in stores, an option now used by big companies such as Best Buy Co Inc and Toys 'R' Us.

eBay also plans to dismantle its standalone mobile app for its $5 same-day delivery service "eBay Now" as soon as this week. The service will instead be folded into eBay's mobile app and website.

"The big play in the U.S. has been around buy online, pick-up in store," Tom Allason, head of eBay Local, said Wednesday.

The shift reflects how eBay and other technology companies, including Amazon Inc and Google Inc, still struggle with the high cost of same-day delivery. Only a fraction of a small retailer's sales come from customers who also opt for same-day delivery, making it difficult to make a profit.

"That's a part of why delivery is only one piece of the equation," Allason said in an interview.

Earlier, the e-commerce giant intensified efforts to court retailers as it prepares to split its marketplaces division next year from PayPal, the payments unit that has been the fastest-growing part of its business.

eBay had planned to expand same-day delivery to 25 markets by the end of 2014, but it is only available in New York, San Francisco, the broader Bay Area, Dallas and Chicago.

Last year, eBay bought Allason's U.K.-based same-day delivery startup, Shutl, a marketplace connecting eBay sellers with local courier companies who are available to deliver packages. eBay initially used "valets" to deliver packages, but switched over to the Shutl platform in the United States this spring. Allason said the delivery costs have dropped but declined to say by how much.

eBay is exploring other delivery options for the United States, Germany and other markets, including the "click-and-collect" model used by Shutl in the United Kingdom, in which shoppers pick up certain eBay purchases from British retailer Argos.

© Thomson Reuters 2014