John Donahoe Explains Why eBay Is Testing A Same-Day Delivery Service

At the Goldman Sachs Technology and Internet Conference in San Francisco, eBay CEO John Donahoe spent some time explaining why the company was getting into the same-day delivery business with its eBay Now mobile app.

eBay Now seems really different from eBay's traditional marketplace, where you have a host of sellers offering all kinds of goods—classically ones that are scarce or otherwise hard to find.

But eBay Now actually takes a lot of the company's strengths and applies them to the business of delivering goods locally in under an hour.

Donahoe explained to investors and press in the audience that eBay Now has a "bidding and reputation system," where couriers with available time get a chance to sign up to take deliveries, and get rated based on their performance, which should improve the efficiency of the delivery system over time.

He compared it to Uber, which matches limos and taxis with riders who hail a ride with a mobile app.

eBay also has PayPal, which it acquired a decade ago, to handle the mobile payment part of the transaction, and Milo, a service it acquired just over two years ago, which tracks real-time inventory in local retail stores. Those are essential pieces of eBay Now.

And eBay more or less invented the notion of an online reputation system in e-commerce in the '90s, with its feedback ratings, so it has some experience to bring to bear.

At present, Donahoe said eBay wasn't trying to make money with eBay Now, which is available in New York and San Francisco—it's just trying to "innovate" and learn.

"People are buying things today," Donahoe said. "People are paying for things today. We're just changing how they do it."

Amazon and Google have reportedly been exploring same-day delivery services. (Amazon already offers a very limited version of same-day delivery in a hodgepodge of markets, but not with the on-demand, hour-or-less convenience of eBay Now.)

And startups like Instacart and Postmates are also offering same-day deliveries. Postmates, which launched in San Francisco, just expanded its service to Seattle. So delivery is another space where eBay has to stay on guard against fresh new competitors.