Back in the Web 1.0 era, a hot startup named Kozmo.com aimed to revolutionize e-commerce by delivering an array of products in less than an hour. It turned out that Kozmo would be most famous for failing: After raising $250 million and launching in eleven cities, it folded in 2001. Several competitors, such as Urbanfetch, also failed to figure out how to make ultra-fast delivery work.
And then there’s eBay Now. The e-commerce behemoth began testing same-day shopping in San Francisco in August. It officially launched the service there in October, and brought it to New York City in November. It’s still officially in beta-test form in both cities.
That’s an appropriate label for it to carry. Just as in the Kozmo era, same-day delivery is a cool idea. But eBay Now has its share of rough spots. And even with eBay’s formidable resources, it’s not a given that the service is going to be around for the long haul.
Kozmo and its rivals died so quickly at least in part because their business model was unsustainable: They opened their own warehouses and stocked them with stuff like DVDs and ice cream. But they charged about the same price you’d pay anywhere else, and didn’t tack on a huge delivery fee. That left little money to pay for the warehouses, let alone to eke out a profit.
Without building any warehouses, eBay has access to a far broader range of products than Kozmo ever carried, stored in convenient repositories all over the locales it currently serves. When a customer orders a product, the company simply sends a courier — it calls them “valets,” to emphasize their helpfulness — to a nearby store, including big names such as Bed Bath & Beyond, Best Buy, Home Depot, JCPenney, Macy’s, RadioShack and Target. The valet finds the item (or items), waits in line with other shoppers to pay, and then makes the delivery. eBay doesn’t promise a specific delivery time, but says the process takes “about an hour.”
Everything’s done using a smartphone application — available only for the iPhone at the moment — which lets you browse for products, add them to a shopping cart and place an order. When you do, the service alerts a valet and gets the process going. (San Francisco valets generally drive cars; in New York, most of them use a bike or deliver on foot.)
The app lets you keep tabs on the delivery’s progress, and allows you to make a phone call to the courier. It also uses geolocation to figure out where you are; eBay points out that you could have an item delivered to you at the beach or on a park bench as well as at your home or office, and can switch delivery destinations even after you’ve placed an order.
Rather than building everything from scratch, eBay is leveraging some technologies it already owns. All of eBay Now’s data about in-stock products at retailers is provided by Milo, the local-shopping startup which eBay bought in 2010. And you pay for products you buy using PayPal Here, the Square mobile-payments competitor from eBay’s PayPal division. (You don’t need a PayPal account — any major credit card works fine — though you can use PayPal if you’ve got it.)
eBay really wants San Franciscans and New Yorkers to give eBay Now a try. It’s charging a flat $5 per delivery, and you can order multiple items as long as they all come from the same store. The fee is waived for your first three orders, and you get a $15 discount on the first one.
Wait a sec. How can eBay turn a profit when it’s buying products at full retail price, selling them without any markup and charging little or nothing for delivery?
Well…it can’t. The company says that it’s just trying to get the service rolling, and will figure out ways to make money later. For instance, it might establish deals which involve retailers paying a finder’s fee, or it might raise the delivery charge for at least some products. For now, the $5 fee even covers bulky stuff like 50″ HDTVs.
In other words, eBay Now doesn’t yet have a workable business model in place, which gives it something in common with Kozmo even though its startup costs are presumably vastly lower.
No matter how you do it, same-day delivery is complicated. eBay’s system has lots of moving parts, with lots of little things that can go wrong.
I encountered one such glitch with the first order I placed, for a couple of adapters for my new iPhone 5. Josh, my valet, managed to make the purchase at Best Buy and get to my office within an hour and fifteen minutes. But when he tried to swipe my credit card using PayPal Here on his iPhone, cellular coverage seemed to be too spotty in our nineteenth-floor office suite. We had to make an elevator trip down to street level to seal the deal.
A few days later, I ordered a Cuisinart ice cream maker. Valet Allyson also arrived in around an hour and fifteen minutes, after bringing the appliance from a Macy’s on the other side of town. She was particularly personable, but once again, PayPal was balky. This time, I proactively suggested heading downstairs; even then, it took another five minutes of fiddling to make the payment system work.
In between buying the iPhone adapters and the ice cream machine, I got a far more comprehensive look at how eBay Now works by tagging along on two deliveries, at eBay’s invitation. I rode shotgun with Chris, another valet, and shadowed every step of the process.
Chris and I (and an eBay representative) sat in his Volvo, parked in downtown San Francisco, for only a few minutes until his eBay Now app alerted him of an incoming order: a cold compress and some cold medicine, which he was to pick up at a Walgreens several miles away. (In the case of retailers with multiple locations, eBay Now chooses which outlet to visit based on its proximity to the customer and the desired products being in stock.)
Once we’d crept our way through rush-hour traffic and arrived at the store, Chris tracked down the products, making sure he’d found precisely the correct versions. When he did, he discovered that one was slightly more expensive than eBay Now’s listing had indicated…and one was slightly cheaper.
The pricing surprise required a quick call to the customer to O.K. the new grand total.
And then Chris paid Walgreens, using a special debit card which eBay had credited for precisely the amount required to make the purchase.
Next, he logged the successful product pickup and shot a photograph of the receipt with his iPhone. (Customers who want to return products don’t take them back to the store — instead, they call eBay, which sends a valet to handle the return and refund.)
When Chris arrived at the address provided by his eBay Now app, he circled the block a couple of times and, finding no parking spots, temporarily blocked a nearby garage door. Then he discovered that the address was an insurance office — and nobody there seemed to be expecting a delivery.
When a customer places an order, the app determines the address through geolocation; it’s an imprecise technique, and the user can override the results if they’re inaccurate. But in this case, the customer apparently didn’t notice the error. So Chris called again.
It turned out that she was just next door. As with my purchases, PayPal Here was balky; it took Chris several minutes of futzing to make it accept his login information.
The delivery complete, Chris checked it off in his app.
A few minutes later, another customer order came in — for printer paper and ink — and we were off again. We tooled over to Office Depot, then drove to the customer, who turned out to be playing tennis at a sports club. (He needed the supplies so his kid could print out a homework assignment.)
This delivery went smoothly until the customer tried to pay. Once again, Chris had trouble getting PayPal to work. So much so that he ended up giving the customer the order for free.
If you’ve been following along, you may have noticed that the majority of eBay Now hitches I witnessed involved the PayPal Here payment process. Actually, in all four encounters — two as a customer and two while shadowing Chris — I never saw it just work.
An eBay representative told me that PayPal Here’s 0-for-4 performance was atypical. When Chris struggled with payment processing, his iPhone was attempting, unsuccessfully, to connect to a wi-fi network; he shouldn’t have had wi-fi turned on. The company says that the PayPal Here app has trouble determining its location in dense areas such as San Francisco’s financial district, where I had two orders delivered to TIME’s office; it’s working on a fix.
That brings up a question: Wouldn’t it be simpler if customers used the eBay Now app to pay as part of the ordering process? Why, yes, it would — and eBay says it plan to make that possible. Besides eliminating any possibility of PayPal Here malfunction, pre-paying will permit valets to drop off products if the customer doesn’t happen to be available. And it might also let users look up past transactions, something you can’t currently do in the app, which is a tad rudimentary.
Other improvements eBay is contemplating include arranging for valets to pick up products at stores without waiting in line at checkout — which would cut delivery time — and allowing customers to place orders when stores aren’t open, for later delivery.
In its current form, eBay Now may feel like an idiosyncratic experiment rather than a business with an obviously bright future, but I hope that the company sticks with it. I’m ready to be a regular customer of a same-day delivery service which really works — and I’ll bet a lot of other busy, impatient people are, too.