If you’re having a paper-towel emergency, which online marketplace should you turn to? The topic came up last week and raises questions beyond the obvious ones like, who has a paper-towel emergency and under what circumstances?
During his keynote address at the eBay Open conference last week, eBay CEO Devin Wenig discussed shipping speed and said, “If you need paper towels in 4 minutes, peace! – I’m not your guy.”
It’s true most people would likely think of Amazon (or retail sites like Walmart or Target) before eBay when purchasing paper towels – emergency or not.
But despite Wenig’s remarks, he’s rolling out changes that indicate he may not be as blasé about fast shipping as his joking implied.
He acknowledged that everybody wants their stuff quicker, wants their items tracked, in a way that is “retail standard.” He said eBay’s winning value proposition is the inventory sellers provide, not shipping. But that doesn’t mean shipping isn’t important, he said.
It’s interesting to note that at one time, eBay did try to provide paper towels (and other items) for those who wanted near-instant delivery. However, former eBay CEO John Donahoe’s “eBay Now” service that charged shoppers $5 for same-day delivery ended in failure.
While Wenig was somewhat cavalier about shipping speed in his paper-towel remarks, he’s taking the issue very seriously, as he went on to announce eBay Managed Delivery, an Amazon FBA-style fulfillment program launching in the US next year.
“It isn’t for everyone, it’s not meant to be for everyone. If you sell individual, unique items, maybe it isn’t the thing for you.” But, he said, eBay has gotten feedback “time and time and time again” from sellers asking for help with package delivery.
One day after Wenig presented his keynote address, Amazon Chief Financial Officer Brian Olsavsky was pressed by analysts about its move to transition Prime Free 2-Day Shipping to 1-day.
Implementing 1-day free shipping for Prime customers was a “shock to the system” from an operations stand point, with lower productivity and higher-than-anticipated costs in the second quarter (April, May, June).
But Olsavsky indicated Amazon had been down this road before (and proved skeptics wrong) by making a success of free Prime shipping and later opening it up to third-party merchants through its FBA fulfillment service.
He said Amazon would be working through the challenges of 1-day Prime shipping for a number of quarters, “but when the dust settles, we will regain our cost efficiency over time.” He may as well have said, what’s a few quarters when we’re playing the long game?
He said Amazon saw lower ASPs (Average Selling Prices) in the quarter. “I think what you’re seeing is just a lot more products enter the consideration set for our customers. I think maybe they can’t wait 2 days but they can wait 1 day,… I’ve noticed that personally myself. With 1-day shipments, it’s here before you know it.” However, Olsavsky said it was too early to see exactly which categories were most impacted.
With online marketplaces and retailers looking to deliver packages more quickly, it seems inevitable there will be an impact on logistics during the busy holiday shopping season ahead, when household necessities will be vying with holiday gifts for space in planes, trucks, and vans on their way to eager customers.
