E-fulfillment: The opportunity in same day delivery

Lately, I’ve been in full-blown grumpy old man mode. It started a couple of weeks ago when someone’s administrator asked me if I was planning to spend Thanksgiving with my grandkids. I will admit my mustache is greyer than it used to be, but hey, I’m not that old—am I? Last week, I sounded like Mr. Wilson from Dennis The Menace as I argued with a college kid across the street who insists on parking on the grass in front of my house rather than in the paved parking lot behind her building. Yesterday, I felt like a Luddite reading a story on same-day delivery in The New York Times.

The Times piece described the lengths eBay is going to roll out a new local shopping service that promises not just same-day delivery, but delivery in about an hour. Available now in Manhattan, the Internet retailer has plans to soon offer the service out to 25 cities.

Now, we’ve all read about Amazon’s strategy of rolling out nearly four dozen distribution centers near major metropolitan areas in the U.S. to do same-day delivery, a service that Amazon says is unprofitable. eBay is taking an entirely different tack. Rather than build millions of square feet of distribution space, eBay is deploying an army of bike messengers, cabbies and subway riders who get an alert on their phones, make a mad dash to the nearest retail partner (in the Times story, it was Babies ‘R Us) to purchase the items needed to fill the order, then make another mad dash to deliver the order to the consumer in that one-hour time frame. All for 5 bucks—except that during the holiday season, eBay will offer the service for free.

Like Amazon, eBay tells us that it will lose money on the service. Instead, its all about building a loyal customer base, according to the Times.

The grumpy old man in me says this is just another of those crazy, Internet-only business models where companies are rewarded for losing money if they gain customers. The materials handling journalist in me says these are trends our industry needs to watch. Yes, retailers are presently looking at multi-channel distribution centers to fill omni-channel orders. But I wonder if in the future—the very near future—much of this action isn’t going to move to the retail store to make the most of the brick and mortar infrastructure and get closer to the customer. We need to pay attention and figure out how our solutions fit in this new world.