|EcommerceBytes-NewsFlash, Number 3149 - September 10, 2013 - ISSN 1539-5065 2 of 4|
eBay CEO John Donahoe floated a curious idea in a recent interview with BusinessWeek. Asked about the company's plans for expanding same-day delivery service, Donahoe suggested that an untapped resource in urban markets could be found in ... newspaper trucks.
In the relevant portion of the interview, toward the top, Donahoe is asked if he is convinced that same-day delivery is cost-effective.
Donahoe: "I think it'll be an economical service to offer. There's a lot of excess delivery capacity in every city."
Business Week: "Bike messengers or delivery vehicles?"
Donahoe: "Newspaper trucks."
Donahoe does not elaborate on the idea (and eBay did not respond to a request for comment), save to allow that eBay is figuring things out about same-day delivery as it goes along, and that the company is "willing to partner with anyone."
Tapping into the "excess delivery capacity" Donahoe refers to, in the form of newspaper delivery trucks, could be an intriguing idea, but is it practical? EcommerceBytes posed this question to John Callan, a veteran of the shipping industry and managing director at the consultancy Ursa Major Associates. Callan, to put it mildly, has his doubts.
"I'm skeptical about it. And I'm a transportation guy. I've been in the delivery business all my life," he said in an interview. "I'm skeptical about newspaper trucks playing a major role in this."
Same-day delivery ranks as a high priority for ecommerce heavyweights like eBay, Amazon and Google, and has even drawn interest from the U.S. Postal Service. For its part, eBay is trialing its eBay Now service in San Francisco, San Jose and New York (and soon Chicago and Dallas), offering delivery typically within an hour for a $5 fee on orders of a minimum of $25.
Dense populations and close proximity to merchandise are among the chief criteria that make same-day delivery viable, hence the big-city markets where ecommerce firms, as well as the Postal Service, are experimenting with the service. But in those environments, newspaper trucks are generally big vehicles that run on long, prescribed routes, in contrast to the individually owned cars or vans that make the rounds in the suburbs.
"Newspaper trucks by definition, at least in urban areas, tend to be very large," Callan said.
That seems to stand in contrast to the smaller, more agile type of vehicle - a car, van or even a bicycle - that Callan suggests would be more appropriate for same-day delivery service. eBay, for instance, with its eBay Now program, stipulates that items precluded from same-day delivery include "TVs larger than 42 inches, large furniture, items that require a service contract (such as certain cell phones and other electronics), and other products too large to fit inside a car."
In his interview, Donahoe offered the example of a traveler who, landing in New York, discovers that he has forgotten his iPhone charger. "I don't want to have to find a store to buy it. I want it delivered to me so I can get my phone charged," he said.
But to Callan, that use case, even if perfectly valid for forgetful iPhone owners, stands as something of an exception.
"Honestly, I don't think they're going to want to pay for it. I just don't see same-day, point-to-point delivery as being a big part of the market," he said. "I don't think we're desperate to have our shoes delivered the same day."
In part, that reluctance traces to consumers' evolving shopping habits. Callan pointed to a recent survey of more than 1,000 consumers conducted by Booz & Company, in which almost half of the respondents said that they are "unwilling to pay any fee whatsoever for delivery." Meantime, just 10 percent of consumers polled said that they would pay $10 or more for same-day delivery.
The survey further unearthed a pattern of consumers shopping during their leisure time - often in the evening after work - suggesting that the immediacy of same-day delivery isn't enough of an enticement to warrant the cost, particularly when free shipping times have winnowed to just a handful of days.
"If it were free in a month, that's one thing," Callan said. "But you get free in a few days often now."
About the author:
Kenneth Corbin is a freelance writer based in Washington, D.C. He has written on politics, technology and other subjects since 2007, most recently as the Washington correspondent for InternetNews.com, covering Congress, the White House, the FCC and other regulatory affairs. He can be found on LinkedIn here.
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