Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Can These Companies Cash In on Your Laziness?

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

When shopping, a growing number of consumers compare in-store products to online prices. And of those who do, 29% end up buying it online, according to one study, often from (Nasdaq: AMZN  ) . The usual trade-off for the consumer is price versus their immediate need. Does the customer need that new television now for the premiere of Mad Men? Or can they wait a few days to enjoy Don Draper and Peggy Olson in high definition?

Recently, however, online retailers have been making a push to deliver products the same day they're ordered. Should bricks-and-mortar stores close up now, or will this plan fizzle?

The players
A few days ago, eBay (Nasdaq: EBAY  ) launched a San Francisco test of eBay Now, which offers same-day shipping for goods purchased from local retailers, including Macy's (NYSE: M  ) , Toys "R" Us, Target (NYSE: TGT  ) , and Best Buy (NYSE: BBY  ) . This is making ordering items easier than ordering a pizza. As an example, one of VentureBeat's writers ordered a hard drive that arrived at his apartment within an hour. And for the delivery, eBay plans on charging $5.

Along with eBay, many have speculated that is looking to provide same-day deliveries. As the Financial Times reported, Amazon's agreement to collect sales taxes has allowed it to place warehouses near large population centers like New York City and Washington, D.C. Even with these investments, Amazon lowered expectations for the service in its recent earnings call, saying that it doesn't "see a way to do same day delivery on a broad scale economically."

Will it work?
Amazon could be very right in its analysis of such a service being economically efficient., a 1998 start-up, promised one-hour deliveries for a range of products, and like many of its dot-com brethren, eventually closed up shop. It first offered free delivery, which drove the average order cost for Kozmo to $10, but the customer only paid $7.'s Prime membership, in which customers pay $79 per year in exchange for free two-day shipping and $3.99 one-day shipping, is most likely crimping Amazon's margins. No matter if a customer orders a toothbrush or a TV, Amazon foots the bill. This has increased Amazon's net shipping costs as a percent of revenue from 3.4% in 2009, to 4% in 2010, to 5.1% in 2011. Net margins have correspondingly decreased:

AMZN Profit Margin Chart

AMZN Profit Margin data by YCharts

While unsustainable for free deliveries, it seems that the right price could cover the costs and earn a return on same-day delivery. Giving a sign of hope, a former member of the defunct Kozmo founded a similar same-day delivery company in Manhattan, and was able to find a profitable model. If eBay and Amazon can deliver, customers may even begin to pay a premium for items ordered online and delivered same-day to avoid the retail environment.

Bricks and e-mortar?
The most interesting fact is that eBay's service pairs up with stores that have traditionally been fighting online retailers. These retailers are throwing everything they can at the Internet to see what sticks.

Last year, Macy's began shipping online orders from a couple hundred of its roughly 800 stores, effectively making each store a mini-warehouse. Online sales for the most recent quarter were up almost 35% over last year, while same-store sales were up 3.7%. Target has added special sales exclusively online this summer, like its "Summer Cyber Week" sale. Its same-store sales were up 3.1% for the quarter. Best Buy added 50 smaller retailers to sell items on its own website to expand its offerings, and its same-store sales were down more than 5% in its latest quarter.

If eBay can successfully position itself as a platform for these larger retailers to stay alive, it can become an indispensable service. This could also funnel more payments through its PayPal subsidiary, cutting out credit card merchants.

The American way
If a business makes it easier to be lazy, it will likely be successful. If it can make being lazy just as efficient as being proactive, it will likely be wildly successful. The question for these companies is whether they can make this laziness profitable on a large scale. It seems Amazon sees a struggle with that problem, while eBay is sticking its toe in the Bay Area to attempt to solve it.

If you don't want to bet on instant deliveries just yet, take a look at these "3 Stocks That Will Help You Retire Rich." This free report gives you the basics of building long-term wealth, and highlights three stocks that can help you achieve a great retirement portfolio. Read it now.

Fool contributor Dan Newman owns shares of eBay. He ordered something off of Amazon to see if it could deliver it to a rural northern Michigan location in one day. It did.

The Motley Fool owns shares of and Best Buy. Motley Fool newsletter services have recommended buying shares of and eBay. The Motley Fool has a disclosure policy.
We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1977093, ~/Articles/ArticleHandler.aspx, 5/30/2016 8:52:13 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 days ago Sponsored by:
DOW 17,873.22 44.93 0.00%
S&P 500 2,099.06 8.96 0.00%
NASD 4,933.51 31.74 0.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

5/27/2016 4:00 PM
AMZN $712.24 Down -2.67 +0.00% CAPS Rating: ****
EBAY $24.36 Up +0.24 +0.00%
eBay CAPS Rating: ****
BBY $32.03 Up +0.08 +0.00%
Best Buy CAPS Rating: *
M $32.72 Up +1.15 +0.00%
Macy's, Inc. CAPS Rating: **
TGT $68.90 Down -0.01 +0.00%
Target CAPS Rating: ***