The Motley Fool’s readers have spoken, and I have heeded your cries. After months of pointing out CEO gaffes and faux pas, I’ve decided to make it a weekly tradition to also point out corporate leaders who are putting the interests of shareholders and the public first and are generally deserving of praise from investors. For reference, here’s my previous selection.
This week, we’ll turn our attention to the retail marketplace and I’ll show you why eBay Inc (NASDAQ:EBAY) CEO John Donahoe is truly at the head of the class among his peers.
Kudos to you, Mr. Donahoe
You might be under the impression that online marketplace providers like eBay Inc (NASDAQ:EBAY) have a free and clear path to success, but you’d be dead mistaken. Sure, the Internet offers consumers a convenient way to browse through merchandise on their own time and have it delivered to their front door, but that doesn’t mean online retailing doesn’t have its fair set of challenges.
To begin with, online retailers like Amazon.com, Inc. (NASDAQ:AMZN) and eBay are under pressure from Congress to begin collecting sales tax from customers. The Marketplace Fairness Act, also known as the Internet tax bill, passed with flying colors in the Senate and could require these online retailers to collect tax from all customers — not just the states in which it has offices or distribution centers. If it passes, these e-tailers could lose their primary competitive advantage over brick-and-mortar stores.
Call me crazy, but the ability to touch and feel a product before buying it is another major deterrent. There are quite a few personalized items that just fail to find the type of purchasing carryover online that e-tailers would like to see.
Then there’s pricing, which has becoming an issue for traditional and online retailers because of higher payroll taxes and delayed tax refunds. Wal-Mart Stores, Inc. (NYSE:WMT) , for instance, issued weak guidance for the upcoming quarter in February because of the effect of higher taxes and delayed refunds. Wal-Mart Stores, Inc. (NYSE:WMT)’s income demographic is among the biggest beneficiaries of tax refunds, so it’s pushed sales for the company out into the next quarter potentially.
Despite these concerns eBay Inc (NASDAQ:EBAY) and Donahoe have persevered; not only surviving but thriving. In eBay’s first-quarter results last month we saw a double-digit increase in both revenue and profits as it gained an additional 2.8 million customers.
eBay’s success has come about for a number of reasons. First, it’s embracing a trend toward mobile shopping. By focusing its efforts on mobile usability, it’s driving sustainable double-digit growth in active users. Second, eBay’s payment-processing division PayPal is still looked upon as the industry standard in electronic payments, tacking on 5 million new customers and processing 21% more net total payment volume than in the year-ago period. Not to mention that eBay Inc (NASDAQ:EBAY)’s PayPal also struck a mobile partnership with Discover Financial Services (NYSE:DFS) last summer, giving both companies global payment solutions growth potential and one-upping its rival Square, which had struck a deal with Starbucks Corporation (NASDAQ:SBUX) just weeks earlier. Finally, improvements in eBay’s marketplace architecture are making it easier for consumers to navigate the site and faster for businesses to pay and get paid.