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EBay points to strong potential in mobile as Q1 results disappoint

EBay gained approximately 2.8 million new mobile customers in the first quarter  that ended March 31 of 2013, driving double-digit growth in active users at both PayPal and Marketplaces. The  company also reported that it will be testing using check-ins to provide personal service at retail locations throughout 2013.

“We know that mobile users are more engaged than non mobile users and multi-screen users buy twice as much as non multi-screen,” said Jack Donahoe, president and CEO at eBay Inc., San Jose, CA, during a conference call with analysts to discuss the results. “So we know mobile is significantly increasing user engagement and we are getting a greater number of new users from mobile.

“There were over four million new users to Marketplaces last year via mobile devices and the first quarter alone we had a little under three million companywide,” he said. “So as those consumers go through that ramp up during the first year to two years on our platforms, we’ll see if they ramp up engagement more quickly than has been historical fact.

“It is a positive trend one way or the other that our mobile strength continues to be a source of competitive advantage.”

Enhancing customer relationships
EBay’s significant growth in the recent past lost some momentum with the release of its first quarter financial results yesterday, which narrowly beat analysts’ expectations as higher costs offset gains in its main businesses.

As a result, share of eBay dropped after hours.

EBay reported revenue for first quarter totaling $3.7 billion, a 14 percent increase year-over-year. The company’s net income for the period totaling $677 million, or $0.51 per diluted share compared with a year-earlier profit of $570 million, or 55 cents.

During the call with analysts, Mr. Donahoe discussed how PayPal is being used to enhance merchants’ relationships with customers, in particular via mobile check-ins.

The PayPal app last year introduced the ability to check-in and pay at retail locations.

“One of the areas that I think you will some particular take up over time is the enabling of the merchant to give personalized service and enabling a merchant to receive personalized service by checking in,” Mr. Donahoe said.

“We think that is going to be a really interesting and potentially exciting consumer enhancement,” he said.

“Whether it will happen in one vertical or another, I don’t know. But we are going to be testing that in multiple locations during 2013.”

Mobile engagement
Mobile engagement was one of the key drivers of a 16 percent increase in gross merchandise volume at eBay in the U.S. Overall, gross merchandise volume was up 13 percent for a total of $18 billion.

In total, downloads of eBay’s suite of mobile apps surpassed 162 million since launching in the third-quarter of 2008, helping eBay to expand its overall commerce footprint.

EBay’s enabled commerce volume – the total commerce and payment volume across Marketplaces, PayPal and GSI – grew 19 percent for a total of $49 billion.

The company did not revise its full-year forecasts and still expects to generate $20 billion each from mobile commerce and mobile payments this year.

Scaling up
Mobile is playing an important role in the growth of PayPal. Over the past 12 months, one out of every four PayPal account holders made at least one purchase through mobile.

The net total payment volume through PayPal during Q1 totaled $41 billion, up 21 percent and was driven by consumer and merchant use of PayPal both on and off eBay, according to the company.

In the first quarter, PayPal gained five million active registered accounts, ending the quarter with 128 active users, up 16 percent.

PayPal continues to build its mobile presence both in the United States and internationally.

During the first quarter the iPad version of PayPal Here – a mobile payment solution for small businesses – was launched in the U.S.

PayPal Here also became available for sale at more than 2,700 SoftBank locations in Japan while the chip and PIN version was announced for roll out this summer in Britain.

PayPal’s offline initiatives are now live in almost 20,000 major retail locations in the U.S.

“On the mobile front, we believe we are perfectly positioned to benefit the broad consumer adoption of mobile,” Mr. Donahoe said.

“We are integrating mobile into every aspect of our business,” he said. “And we have a proven ability to leverage mobile technology at scale across platforms, mobile operating systems and devices.

“And our mobile innovation capacity is accelerating.”

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York