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Bensinger, Greg. Wall Street Journal (Online) [New York, N.Y] 03 Dec 2012: n/a.

Abstract
SAN FRANCISCO--To gain a competitive edge in online sales this holiday season, companies including eBay
Inc. and Wal-Mart Stores Inc. are turning to a new weapon: people like Jaclyn Widtfeldt. Wal-Mart began
offering same-day delivery in October, and contracts with third parties such as the United Parcel Service Inc.
to get access to couriers and grocery delivery employees in cities such as Philadelphia, Minneapolis and San
Francisco.

Full Text

SAN FRANCISCO--To gain a competitive edge in online sales this holiday season, companies including eBay
Inc. and Wal-Mart Stores Inc. are turning to a new weapon: people like Jaclyn Widtfeldt.

On a recent Tuesday just before 7 p.m., the 23-year-old was driving around downtown San Francisco when
her employer eBay sent a message to her iPhone that customer Luke Maffei wanted a springform pan, stat.
So Ms. Widtfeldt sped off in her Ford Fiesta to Macy's, purchased the $21 pan and delivered it directly to Mr.
Maffei by 8 p.m.

"I got to my friend's house and realized I didn't have a pan [for a cheesecake] and I didn't want to leave the
party," said Mr. Maffei, a 29-year-old online recruiter who had to pay only about $10 for the pan and the
eBay service together, thanks to a $15 first-user discount. "So I ordered it, and here it is. That's pretty
cool."

"It's pretty interesting to see what people need on short notice," said Ms. Widtfeldt, who added that she
once delivered a children's dragon costume to a customer at a bar.

Ms. Widtfeldt is part of a San Francisco team of about 50 couriers that eBay has hired to fetch and deliver
goods directly to customers' doorsteps within an hour of an online order. EBay launched a trial of the
service, dubbed eBay Now, in August and rolled it out to New York in November, with plans for other cities
in the works.

The service is available only through an iPhone app. For now, the items are all purchased in local stores,
rather than sold through eBay merchants.

In each town, eBay plans to have dozens of couriers like Ms. Widtfeldt, who use their cars, bicycles or even
the subway to shuttle goods around town.

Other companies are also racing to offer same-day delivery of online orders. Wal-Mart began offering
same-day delivery in October, and contracts with third parties such as the United Parcel Service Inc. to get
access to couriers and grocery delivery employees in cities such as Philadelphia, Minneapolis and San
Francisco. Google Inc. also began testing a similar same-day delivery service recently in the San Francisco

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Bay area.

Amazon.com Inc., meanwhile, has offered same-day delivery since 2009 and provides it in 10 cities
including Seattle, Indianapolis and Boston. Startups such as Shutl, Instacart and Postmates are also tackling
same-day delivery.

Driving this proliferation is the desire to give consumers instant gratification with their online orders to drive
sales, as well as giving customers another incentive to skip lines at their local retailer. Many of the
companies are hoping to compete with Amazon, which has built a reputation for speedy, low-cost deliveries
through its network of sprawling warehouses.

"There's a lot of inventory that's close to customers, in stores and warehouses, but the link through delivery
hasn't really been cracked yet," said eBay's marketplace President Devin Wenig. "This is an experiment to
determine if we can cement eBay into local markets by handling all aspects of commerce."

The problem is that the economics of same-day delivery are challenging. Analysts estimate many of the
services are money losers, at least for now.

"Retailers are clearly subsidizing this service to improve the customer experience," said Kerry Rice, a
Needham & Co. analyst. "Amazon created this monster and everyone has had to jump on board to
compete."

There are high upfront costs to running a troop of couriers, for instance. EBay is paying couriers about
$12.50 per hour, plus 55 cents per mile driven, and furnishes drivers with a parking card for when a lot is
convenient. EBay plans to invest more into the service, including new uniforms and advertising on buses
and, possibly, on couriers' cars.

Meanwhile, consumers don't pay much for same-day delivery. EBay charges $5 per delivery with a minimum
order of $25. As a promotional offer, the company is giving the first three deliveries free, as well as a $15
credit on the first order. EBay said the service will be profitable as it gets larger and when it can combine
orders.

Wal-Mart charges $5 to $10 for same-day delivery regardless of the purchase size. Walmart.com Chief
Executive Joel Anderson said his company has had to rejigger some store operations to be able to fulfill
same-day delivery orders. The Bentonville, Ark., company said it may seek to expand the service to new
markets next year.

"We have 4,000 Wal-Mart stores and local goods within five miles of most customers, same-day delivery
was a natural next step for us," Mr. Anderson said.

Amazon charges $8.99 per delivery of most merchandise, plus an extra 99 cents per item, though rates are
cheaper for members of its Prime shipping program. The company has said it is always looking for ways to
speed delivery, though it hasn't yet found a way to feasibly offer same-day delivery in most markets. An
Amazon spokeswoman declined to offer more specifics.

Same-day shipping initiatives have flopped in the past. During the late 1990s dot-com boom, Kozmo.com
Inc., a startup promising delivery of just about anything in under an hour, garnered venture-capital interest
and a $60 million investment from Amazon on its way to a planned initial public offering in 2000.

But Joseph Park, one of Kozmo's co-founders, said the New York company expanded to too many markets
too quickly and lost money in many of them. Kozmo folded in 2001.

"If we learned one thing, you have to take a careful approach to this, roll it out slowly and study the
markets you go into first," said Mr. Park, now chief executive of online fashion retailer Bluefly Inc.

Kozmo.com originally required no minimum order size and took no charge for transporting goods to
customers, making delivery speed among its teams of bike messengers crucial, particularly for late-night

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orders of small items such as candy bars and DVDs. Mr. Park said the company ultimately implemented a
$2 fee for deliveries under $30 and enforced a $5 order minimum. But it was too little, too late--the
company had expanded to too many markets, Mr. Park said.

"We had filed to go public, we had raised a lot of money and we were going down a path where there was
no question the public, and private markets, would continue to fund our expansion plans," he said. "But
then, as we all know, the dot-com bubble burst and within nanoseconds all capital markets dried up."

EBay acknowledges there are hurdles to same-day delivery. "To make local delivery work requires scale,
there's no doubt about that," said Mr. Wenig. But "we think we can significantly squeeze cost and times in
local markets."

For now, eBay is watching how the service performs with couriers like Ms. Widtfeldt, who said she came
across the eBay Now job listing on Craigslist.com a few months ago. After a background check, she began
delivering goods in September.

Today, Ms. Widtfeldt works four-hour shifts as an eBay courier, making between three and four deliveries
each time. When she's not whipping up and down San Francisco's hills, she reads in her car or goes to
coffee shops. The busiest delivery times are during the workday, eBay said, because customers know
they'll be at their office to accept merchandise.

On the recent Tuesday after dropping off the cake pan to Mr. Maffei, Ms. Widtfeldt shuttled back to
downtown San Francisco before her shift ended at 9 p.m. "This is fun," she said, comparing it to her other
job working at an Urban Outfitters stores. "It's a more intimate experience than regular retail."

Shelly Banjo contributed to this article.

Write to Greg Bensinger at

Credit: By Greg Bensinger

(c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further
reproduction or distribution is prohibited without permission.

Details

Subject Postal & delivery services;

Electronic commerce;
Customer services;
Discount department stores

Location San Francisco Bay

Company / organization

Name: Google Inc

NAICS: 519130;

Name: Amazon.com Inc

NAICS: 454111;

Name: United Parcel Service of America Inc

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