The United States is one of the largest and rapidly growing online retail markets. Sales have grown significantly in the last few years, driven by e-shopping trends and adoption of mobile payments. For online retailers, e-commerce contributed $231 billion sales in 2012 and it is expected to generate $260 billion by the end of 2013.
I have picked up three online retail companies Amazon.com, Inc. (NASDAQ:AMZN), Barnes & Noble, Inc. (NYSE:BKS), and eBay Inc (NASDAQ:EBAY) that are among the top players in online retail sales, and with their best e-commerce practices, these companies expect to see a gain in profitability in the coming years.
Mobile payments to play a key role
eBay Inc (NASDAQ:EBAY) had a good quarter with profits of $829 million. Its profits were mainly driven by the growth of eBay Inc (NASDAQ:EBAY) marketplace and PayPal, and it expects to double its marketplace users and payment volumes at PayPal over the next three years. Mobile penetration will play a key role for both.
PayPal’s sales increased to $1.5 billion in the first quarter, a jump of 18% year over year. The sales were driven by improvements in mobile usage, consumer market share, better merchant coverage, and by covering untapped markets. The changing trends for payments via mobile have paced up dramatically, and with growing awareness, a quarter of PayPal account holders make payments through mobile.
The Point of sale, or POS strategy, an offline payment mode, has been deployed at 20,000 locations expecting to accelerate mobile user growth for PayPal. PayPal will gain both online and offline market share with initiatives such as e-commerce transactions at points of sale. With strong momentum in total payments volume, PayPal could add 42% and 45% to eBay Inc’s (NASDAQ:EBAY)s total earnings for 2013 and 2014, respectively.
For the first quarter, total revenue for eBay Inc (NASDAQ:EBAY) marketplace improved to $2 billion, an increase of 13%. eBay Inc (NASDAQ:EBAY) marketplace is an online platform for trading goods and services. Its growth was seen because of increasing active account users and mobile e-commerce trends. With an intention of expanding globally, the company has added new products to its marketplaces and re-designed its website providing better experience. With uplift in the mobile marketplace, gross margin value increased to 120% in 2012 and is expected to grow another 50% in 2013. Management says that with the increase in mobile users, they are exploring new mobile market channels with better growth prospects.
Exploring growth strategies
In the past, Barnes & Noble, Inc. (NYSE:BKS) has witnessed declining sales for its Nook tablets because of lack of multiple features in their tablets. It reported a decline of 26% in device unit sales year over year. It has also faced tough competition from Apple’s iPad and Amazon.com, Inc. (NASDAQ:AMZN)’s Kindle Fire. But in spite of all this, it has continued to do well with its retail business, which increased 7.3% year over year. The company plans to come up with new strategies to sustain its profitability over the coming period.
Barnes & Noble, Inc. (NYSE:BKS) is signing up with Google to add its apps to Nook tablets available in the U.S. and the U.K. market. This move was followed by the growth in educational toys and in the gaming category among consumers. Presently, it offers 10,000 apps and plans to expand the number of apps to 700,000 by adding Google play. This strategy may help Nook tablets to see better sales in the growing tablet market. The best part of this strategy is that the company is going to offer these products at their original price, without addition of any extra cost to it.
Along with educational toys and gaming category, digital content has witnessed strong consumer demand. Its digital content sales grew 6.8% year over year. By re-investing into digital educational initiatives, the company has come up with a new publishing platform, Nook Press, for authors. This new platform is similar to the company’s original self-publishing platform “PubIt!”, which was a huge success and helped many aspiring authors become best-seller ones.