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eBay Focusing on Payments

Posted on Thursday, Nov 1st 2018

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According to an eMarketer report published earlier this year, online retailer Amazon is expected to account for 49% of the US ecommerce market by the end of the year. Rival eBay (Nasdaq: EBAY) comes in a distant second with a modest 6.6% market share. The report estimates total US ecommerce sales to be nearly $253 billion by the end of the current year.

eBay’s Financials

eBay recently announced its third quarter results. Revenues for the quarter grew 10% over the year to $2.65 billion, in line with the market’s estimates. EPS of $0.56 was better than the market’s forecast of $0.54 for the quarter.

During the quarter, revenuefrom Marketplace platforms grew 6% over the year to $2.1 billion on a GMV of $21.5 billion. StubHub revenues grew 7% to $291 million on a GMV of $1.2 billion. Classifieds platforms delivered revenues of $254 million, growing 8% over the year.

Among operating metrics, eBay active buyers grew 4% across its platforms to 177 million. The Street was looking for 176 million global active buyers across the service.

For the fourth quarter, eBay forecast revenues of $2.85-$2.89 billion with an EPS of $0.67-$0.69. The market was looking for Q4 revenues of $2.89 billion with an EPS of $0.67. It expects to end the current year with revenues of $10.72-$10.76 billion and non-GAAP earnings of $2.29-$2.31. The Street was looking for an EPS of $2.28 for the year.

eBay’s Growth Focus

During the quarter, eBay rolled out several new or expanded programs to help gain more customers. For its seller community, eBay entered into an agreement with Square Capital, which will allow eBay’s sellers access to $100,000 in funding to grow their business. Square Capital already had a small business loan program that it had started back in 2014. Through its agreement with eBay, sellers will be able to get loans ranging from $500-$100,000 in an easier and a faster manner. Not every eBay seller will be eligible for financing, but those that are will receive an email invitation to apply for a loan later this year. The cash can be used for anything to do with growing a business, including building inventory and marketing.

For the developers, eBay introduced new application programming interfaces that will allow them to incorporate eBay features such as Image Search, machine translation, and marketplace feeds into their own platforms.

eBay recently announced its plans to acquire Motors.co.uk, a UK-based classifieds site. Owned by Cox Automotive, Motors.co.uk is a leading UK-based classifieds site that simplifies the process of car buying and selling. Post the acquisition, Motors.co.uk will become part of Gumtree, eBay’s Classifieds business for the UK. Motors.co.uk has more than 350,000 used car listings on its platform and has tie ups with over 5,000 of the UK’s leading automotive dealers for car sales. Terms of the acquisition were not disclosed.

eBay’s Payment Service

In 2015, eBay and PayPal split to form two independent companies. Earlier this year, eBay severed its ties further with PayPal by announcing plans to use Adyen as its primary payment partner as it builds its own payment platform. It expects to have its platform ready by 2023.

As part of this effort, eBay rolled out its new payments experience in the US last month. Since the launch, the service has intermediated $38 million of GMV. It also announced its integration with Apple Pay, allowing iOS users to use that form of payment. eBay claims that it has seen 12% of iOS transactions being paid through Apple Pay.

eBay is making the right moves, but Amazon is just too far ahead in the market. As users, which platform do you prefer to use, and why? Are there specific products that you select from eBay, or is it Amazon all the way for you? What features do you think eBay is missing that keeps you away from the platform?

The market hasn’t been very pleased with eBay this year. Its stock has fallen more than 25% since the start of the year. It is currently trading at $29.04 with a market capitalization of $28.7 billion. It touched a 52-week high of $46.99 earlier this year. It had fallen to a 52-week low of $26.36 last week amid bearish trends ahead of the result announcement.

Photo Credit: Mike Knell/Flickr.com

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