Visitors pass the Ebay logo at the CeBIT computer fair in Hanover March 2, 2011. REUTERS/Tobias Schwarz(Reuters) – EBay Inc unveiled an expansion of its eBay Now same-day delivery service on Monday as the company battles with rival Amazon.com Inc for dominance of the emerging online local commerce market.

EBay Now, which delivers products from stores including Target, Walgreen and Best Buy in as little as an hour, was launched last year in San Francisco and San Jose, California and Manhattan, New York.

EBay is expanding the service to Brooklyn and Queens in New York and to the Bay Area peninsula, between San Francisco and San Jose. Chicago and Dallas will be added later this summer and the service may expand outside the United States in the future, eBay executives said last week.

EBay’s expansion comes as Amazon builds more warehouses closer to customers, which will help the world’s largest Internet retailer offer faster delivery.

EBay, which does not own inventory and mostly avoids running warehouses, is partnering with retailers to create a network of existing physical stores that will, in effect, operate as mini storage and distribution hubs for online purchases.

“This is eBay’s answer to Amazon getting fulfillment centers closer to consumers,” said Ron Josey, an analyst at JMP Securities.

Both companies are chasing the latest frontier in e-commerce: the 75 percent of retail spending that happens within 15 miles of home.

This is a $2 trillion-a-year market in the United States that includes products suited to immediate neighborhood shopping, such as cleaning products, groceries, health and beauty items, according to J.P. Morgan estimates.

If EBay, Amazon and other companies can deliver such products quickly enough, they could grab a bigger share of this local commerce market, J.P. Morgan analysts including Doug Anmuth wrote in a recent note to investors. Continue

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