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eBay Presses Growth

Posted on Friday, Jul 26th 2013

According to the National Retail Federation (NRF), retail sales in the country are projected to grow 3.4% this year. The forecast has been revised down from an estimated 4.2% growth projected earlier. NRF’s online division projects e-tail sales in the country to continue to show strong growth, thus driving retail growth. The federation are projcts an increase of 9%-12% during the year for online retail sales.

eBay’s Financials
eBay’s (Nasdaq:EBAY) Q2 revenues grew 14% over the year to $3.88 billion, marginally shy of the Street’s expectations of $3.89 billion. EPS of $0.52 was short of the market’s projections of $0.50 for the quarter.

By segment, Marketplaces revenues grew 10% to $2 billion with GMV, excluding vehicle sales growing 13% to $18 billion. Revenues from PayPal grew 20% to $1.6 billion. PayPal added 4.7 million active registered accounts to end the quarter with 132 million users.

The U.S. accounted for 48% of total revenues and reported 16% growth over the year. The remaining 52% revenues came from their international operations which grew 12% over the year.

eBay expects to end the year with revenues of $16.0-$16.5 billion and EPS of $2.21-$2.26. Analysts project revenues of $16.31 billion for the year with earnings of $2.75 per share. For the current quarter, eBay projects revenues of $3.85-3.95 billion with an EPS of $0.61-$0.63. The market was looking for revenues of $3.97 billion with EPS of $0.65.

eBay Fighting Competition
eBay is working to provide same-day delivery for select purchases. The service will be available to purchases made within the same market area. They are currently testing the service in big markets of Manhattan, San Francisco, and San Jose. Consumers making a purchase from retail stores like Macy’s, Walgreens and others can use eBay’s services for same-day delivery. The offer is available for a $5 fee for purchases of at least $25 from either one or more participating local retailers.

Same-day delivery is gradually becoming a norm for online retailers. Amazon offers same-day grocery delivery services for select markets, and Google also began Google Shopping Express, which uses same-day delivery in San Francisco. The service is being offered through the company’s mobile app, eBay Now.

eBay is also expanding eBay Now to its desktop site, which will organize goods by store brand and let shoppers track the product during the delivery process. Market research suggests that nearly 75% of retail shopping happens within 15 miles of a buyer’s home. Same-day shopping service by eBay is targeting this segment. The service is being launched in Brooklyn and Queens in New York City and on the Bay Area peninsula, and it will soon extend to Chicago and Dallas. eBay’s model is seen as a good collaborative model that will not only attract buyers to eBay, but also help brick-and-mortar retailers drive online sales through their stores.

eBay’s International Expansion
eBay is also counting on international expansion to drive growth. Recently, it announced the acquisition of two Belgian online classified websites, and The two sites have a consolidated traffic of more than 5.5 million unique visitors per month. The acquisition will help eBay expand its presence in the European markets.

Their stock is trading at $51.26 with a market capitalization of $66.5 billion. It touched a 52-week high of $58.04 in April 2013.


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