EBay Inc. is taking another step toward free and faster shipping.
The second-largest online marketplace in the U.S. will offer its U.S. sellers a new fulfillment service called Managed Delivery in 2020, eBay announced Wednesday at its annual eBay Open conference for its sellers in Las Vegas. Managed Delivery offers sellers the option to work with eBay to store, pack and ship their products.
When sellers use Managed Delivery, they have the option to offer free shipping with faster delivery times (two days or fewer) to customers on eBay. Product pages will have labels that show which products are eligible for free and fast shipping. EBay is still determining what that label will say, says Stuart Reichenbach, head of eBay’s North America logistics, shipping and Managed Delivery.
EBay won’t be building its own warehouses or using eBay-branded trucks to facilitate sellers’ shipment of products. Instead, the marketplace has partnered with third-party logistics companies in the U.S., which will be storing, packing and shipping sellers’ orders. EBay isn’t disclosing the number of companies or which companies it is working with at this time, Reichenbach says.
This is the biggest difference from its competitor Amazon.com Inc.’s Fulfillment by Amazon (FBA) program. With FBA, sellers send products directly to Amazon, and Amazon handles the process from storing the products to delivering items to consumers’ doorsteps. With FBA, sellers’ products become eligible for Amazon’s two-day free shipping Prime loyalty program.
The Managed Delivery program will run through eBay’s site and therefore work directly with eBay, not its logistics partners. EBay will not disclose the fee structure of the program until closer to the launch of Managed Delivery, Reichenbach says.
Sellers can use the service for their sales on eBay as well as their sales on other marketplaces and their own websites. The items will ship in eBay-branded boxes.
“Consumer expectations continue to evolve and they want the choice of speed and cost of delivery,” Reichenbach says. “We need to enable our sellers a scalable solution.”
In the U.S., two-thirds of products sold on eBay are delivered in three days or fewer, and 70% of items ship for free already, he says. Managed Delivery allows sellers to promise faster delivery.
Fast and free shipping is top-of-mind for many online shoppers. 68% of U.S. online consumers say that lack of free shipping has kept them from completing a purchase of half or more of their online orders on any retail site, according to an Internet Retailer/Toluna survey of consumers in March. Specifically on marketplaces, 60% of online shoppers abandoned their carts on half or more of their orders from marketplaces because of the cost of shipping.
Delivery timing is also playing a role in online conversion, as 44% of online buyers say they didn’t complete an order because it wouldn’t arrive on time, according to an Internet Retailer/Bizrate Insights survey of U.S. online shoppers in June.
Electronics accessories retailer Select Tech, which has been selling on eBay for six years, is a part of Managed Delivery’s beta program. In the last month, the retailer has seen a 35% increase in sales, owner and CEO David DiBartolomeo says. The reason for the jump in sales is because his product pages have a “fast and free shipping” tag on it, he says.
DiBartolomeo runs the business out of his home in New Jersey and gets about 1,000 orders a day. The option of Managed Delivery is more cost-effective for his business than leasing warehouse space, he says.
EBay is not trying to compete for the fastest delivery times compared to its competitors, CEO Devin Wenig said in his keynote session at eBay Open. “We aren’t the site for you if you need paper towels in four minutes,” he says. “We aren’t trying to win the fast game. But that doesn’t mean we can’t be better [at improving delivery times].”
Offering merchants more fulfillment services is on trend. Ecommerce technology platform provider Shopify Inc. announced last month a fulfillment service in which it will charge online retailers to store and ship their products in the U.S.
EBay is No. 5 in the ranking of Internet Retailer Online Marketplaces. It sold $94.5 billion worth of goods globally last year and $37.5 billion in the U.S. in 2018.