EBay Launches Instant-Purchasing Service

EBay Inc. (EBAY) has launched its instant-purchasing service to supplement bid-and-wait online auctions, pitting it more directly against online retailers, the company said Monday.

The San Jose, California-based company said the service, known as eBay Express, aims to woo convenience-oriented shoppers interested in snap-buying decisions on fixed price products rather than its traditional online auction format.

The site, at http://www.express.ebay.com/, went public over the weekend and features 10 million items for sale initially, simply by tapping its existing base of eBay store sellers. It unveiled plans in January to introduce the Express service.

The U.S. version of eBay Express is operating in "preview mode" to give hundreds of thousands of sellers that take part in its eBay Stores affiliate program the opportunity to test out the site and consider listing their own product inventory on it. A German version of the site will be offered in the third quarter.

"We are taking this subset of eBay and marketing it in new ways to both existing eBay buyers and new audiences," Jamie Iannone, the director in charge of eBay Express, said in a phone interview.

EBay Express features an online shopping cart that allows buyers to select multiple items and pay for them all at once, as Amazon.com Inc. shoppers are used to doing. It is the first time eBay has offered a "shopping cart" feature to make it easier for shoppers to buy multiple items at once.

While offering a new way to buy, Express represents no change to eBay's underlying business model of connecting buyers and sellers online without holding inventory. By contrast, rivals such as Amazon.com buy, hold and ship inventory from centralized distribution centers.

EBay already offers a "Buy It Now" feature that allows bidders to short circuit the eBay auction process and pay a set price specified by a seller. But the feature is designed to attract buyers and disappears once bidders join an auction.

Express will be a full-service shopping site that only offers goods or services at fixed prices. Sellers can list items both for auction and for outright purchase, eBay said.

EBay sellers with strong buyer ratings can qualify to sell items on both eBay Express and traditional eBay.com sites.

Merchandise from many of the most popular categories on eBay.com will automatically be available to consumers, unless sellers elect not to participate. These include sections devoted to apparel, books, computers, consumer electronics, home and garden, jewelry and sports memorabilia products.

Amazon has far more analytical features for consumers shopping for the best trade off between price and performance, plus it has user reviews. Visitors to eBay Express can search based on price or for items that best match the search terms.

Deutsche Bank analyst Jeetil Patel, in a note to investors, called eBay Express a "step in the right direction" by broadening eBay's appeal in the market for "new goods" versus its historic focus on "used" or close-out sales inventory.

But he said the need for eBay to pay search providers such as Google Inc., Yahoo Inc. or Microsoft Corp.

to promote the service could put pressure on eBay's ability to expand the service cost-effectively.

Shares of eBay dipped 16 cents to $34.92 in afternoon trade on Nasdaq.