With the stock rising more than 50% over the last twelve months, eBay Inc (NASDAQ:EBAY) has certainly delivered a fantastic year for shareholders. But investing is about the windshield, not the rearview mirror, and the big question is whether this is still a good time to buy eBay or if the best is already over for the company. So let´s take a look at some key aspects to consider.
Marketplace
Amazon.com, Inc. (NASDAQ:AMZN) may still be the leader in online commerce when it comes to market share, but this is a high growth industry that will have enough room to comfortably accommodate more than a couple of players over the following years. eBay has implemented some remarkable improvements in its marketplace operations lately: moving away from auctions towards a system more focused on fixed price offerings, improved search, free shipping, and mobile applications capabilities have been a big plus for ebay, and the company has gained a lot of traction in that area over the last years.
Besides, Amazon.com, Inc. (NASDAQ:AMZN) and eBay Inc (NASDAQ:EBAY) are taking opposite sides when it comes to their relationship with brick and mortar retailers. Traditional retailers are feeling seriously threatened by Amazon.com, Inc. (NASDAQ:AMZN) since the online retail giant is aggressively disrupting the entire industry and generating an enormous challenge for many retailers. eBay, on the other hand, is trying to build a bridge to bring those stores into the digital era so they can avoid being left in the past by Amazon, so traditional retailers have powerful incentives to befriend EBay in this competition.
eBay Inc (NASDAQ:EBAY) is blurring the lines between the physical and virtual shopping experience, and mobile is a big part of that strategy. According to the company´s CEO John Donahoe, in more than 50% of all retail transactions the consumer accesses the web at some point, in many cases to compare prices but also when it comes to product specifications, customer reviews, etc.
The company provides comparative pricing information not only from online stores but also from local retailers. Users can either scan a barcode or use visual recognition software to identify a product, and the application will then pull up the different prices for that product. Even better, geolocation makes it possible to find out if the product is available in nearby stores.
eBay Inc (NASDAQ:EBAY) is also experimenting with same day delivery in San Francisco and New York City, companies like Best Buy, Macy’, Target, and Walgreen are joining this trial in an attempt to find more ways to defend themselves from the threat that Amazon represents. Looking beyond the potential financial reward for eBay in the middle term; this service is another way in which the company can strategically become an invaluable ally for retailers.
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