The office supplies retailer say it sacrificed some sales to improve online profitability. It also redesigned its business-facing e-commerce site, StaplesAdvantage.com.
The online marketplace buys same-day delivery firm Shutl.
Online marketplace eBay Inc. has bought Shutl, a courier network for same-day deliveries for online shoppers. EBay says it plans to offer its one-hour delivery service, called eBay Now, in 25 U.S. cities by the end of 2014. Today it launched the service in Chicago, and it will be in Dallas by the end of the year.
U.K.-based Shutl leverages existing delivery networks in the U.S. and Europe by borrowing their excess, idle couriers to provide same-day deliveries, says Christopher Payne, eBay’s senior vice president, North America. Shutl manages eBay Now’s Chicago deliveries and will help to scale the service quickly in the rest of the cities where it plans to expand, including London, he says.
So far, eBay Now is also available in New York City and in California’s Bay Area. Customers pay $5 to receive deliveries in about an hour from local retailers including Toys ‘R’ Us Inc., No. 30 in the 2013 Internet Retailer Top 500 Guide; Babies ‘R’ Us , a unit of Toys ‘R’ Us; Best Buy Co., No. 10; Free People; General Nutrition Centers Inc., No. 152; Guitar Center; The Home Depot Inc., No. 46; Macy’s Inc., No. 12; Office Depot Inc., No. 7; RadioShack Corp., No. 296; Target Corp., No. 18; Urban Outfitters Inc., No. 48; and Walgreen Co., No. 36. The service has proven to be one of eBay’s top-rated offerings in terms of customer service, Payne says.
Deliveries represent only one piece of eBay’s local commerce play, though. The e-marketplace today also launched buy online, pick-up in store for select Toys ‘R’ Us and Best Buy stores, with more retailers to come. It will also soon allow consumers to schedule deliveries so that, for example, a worker can buy something from the office but defer its delivery until she’s at home, Payne says.
Having a wider range of fulfillment options will help the online marketplace this holiday season, he adds. EBay used to be unable to guarantee orders would arrive by Christmas past about December 19th or 20th, he says. “But now we can say ‘no, here pick it up in the store,’ or whatever [the consumer desires].”
Analysts welcome the moves. “EBay's local initiatives could be game changing, in our view, particularly given no one is integrating online commerce and local commerce at scale today, and Amazon isn't likely to be successful here given its competition with local and national retailers,” writes a group of Wells Fargo Securities analysts today in a note about eBay’s announcements. “We find the Shutl acquisition particularly of interest, as we believe the Shutl is the only same-day delivery company operating with scale today.” Moreover, retailers have had 5% to 30% higher conversion rates and 30% to 100% higher average order values using Shutl versus other, not necessarily same-day delivery services, the analysts add.
In addition to enhancing its local pick-up and delivery options, eBay today also announced it has added several new shopping features to help customers find and discover products. It has tapped 200 “expert” curators, including the daughter of aquatic explorer Jacques-Yves Cousteau and rapper-designer Pharrel Williams, to create web collections of their favorite items among the 500 million available for sale on eBay, Payne says.
Customers and retailers can also create their own collections and follow one another on eBay. That way, if a shopper follows Target on eBay, for instance, her eBay home page will feature the latest items Target adds to its collection. In three days since the new social tool became available, consumers have created 56,000 collections, Payne says. Curated collections and the ability to shop as a community will “entice people to come in and explore the new eBay,” he says.
Additionally, a new page on the e-marketplace, eBay Today, features a daily selection of the best collections on the site, chosen by eBay chief curator and editorial director Michael Phillips Moskowitz. One collection on the site today, for example, is called “Order Up! Kitchen prep made great,” and features 15 kitchen items including utensils, kitchen furniture and décor. Shoppers can also browse collections by which ones are trending or by category.
“The world is changing, with the lines between online and offline commerce blurring and the expectations of buyers and sellers rising rapidly,” says Devin Wenig, president of eBay Marketplaces. “With eBay’s latest steps, we are bringing together the best of what people need from a shopping experience—speed and convenience—with things people love about shopping, like discovery and inspiration.”
In the United Kingdom, 10% of consumers offered the option of same-day delivery via Shutl take it, Shutl CEO Tom Allason, told Internet Retailer in a recent interview. He says not all consumers are offered the option because Shutl only delivers in the 75 largest U.K. cities that represent 85% of the country’s population, and because retailers only offer Shutl when they have the product in a local store.
The likelihood of a consumer choosing the service is directly tied to the value of what she’s buying, Allason says. “If shipping cost is under 7% of the basket size we get 20% conversion,” he says. “The highest conversion is in consumer electronics and high fashion because of the relatively high price. We thought certain categories would be better than others, but it’s not true: It’s all about the ratio of cart size to delivery cost.”
He says the cost of offering same-day delivery in the U.S. is 20-25% lower than in the United Kingdom because of lower wages and gasoline fees.
Shutl’s one-hour delivery promise is more convenient than Amazon’s same-day delivery service in 10 major metropolitan areas in the U.S., Allason says. He says the latest consumers can order from Amazon for same-day delivery is at noon, in Seattle; but in New York consumers have to order by 8 a.m. and in Indianapolis by 7:30 a.m. With Shutl they can order throughout the day and get delivery within an hour.