eBay - Reasons to Love It

eBay - Reasons to Love It

For the last few years, eBay has been imposing several changes inside its core marketplace business. And it is to develop the buying experience. And these changes aim to improve engagement on the long haul. However, it caused to some turmoils to buyer conversion in the short term. And this year, eBay has seen its growth in gross merchandise volume (GMV) decelerate.

In addition to that, eBay stock rose 37% since the start of the year despite the softness in the growth of GMV. And there are some catalysts which might send it higher. Here are some of the reasons why investors remain bullish despite the weak GMV growth.

Marketing Strategy of eBay

2019 is the year of transition of the management. And that is the reason investors are nor worrying about the slow GMV. Aside from that, eBat is developing its marketing strategy. For example, pulling and spending from places that are not generating good returns to invest in more profitable channels like social media. As a result, this made some disruption to buyer conversion in the marketplace.

Moreover, more and more states are embracing the internet sales tax. As a result, it is causing buyers to hold off on spending. But, management sees this as a short-term issue due to the underlying fundamentals of the marketplace appear healthy.

Payments Service of eBay

The latest payment services of the e-commerce giant might be even more vital to growth than advertising. eBay plans to end the long-running payment agreement with PayPal Holdings. And part of it is the firm will now take control of its payment processing to offer buyers a variety of choice at checkout. And this might even help sellers save some money with lower fees.

Moreover, buyers can check out with the use of Apple Pay, Google Pay, and PayPal in the latest payment platform. The company launched this in the third quarter of 2018. And so far, it processed about $636 million in payments. Once the new service is fully scaled, management wants to see it generate at least $2 billion in annual revenue and $500 million in operating profit.

Advertising of eBay

eBay is really trying everything it could to develop ita buyer conversion and push it GMV to grow. And it is now helping sellers to have their listings first right in front of the buyer at the perfect time with the use of promoted listings.

Aside from that, the firm has its advertising initiatives. And it gives options to sellers on whether they would love to have their listings promoted by eBay. But of course, this comes with an extra fee. So far, if you check out eBay, this new feature is quite famous to the sellers.

In the second quarter, eBay already gained $89 million in revenue from its promoted listings, up 130% year over year. Then, the management anticipates generating at least $700 million in advertising for this year. Also, it expects promoted listing will sooner or later produce $1 billion in annual revenue or 10% of eBay's total revenue.

   

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