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EBay’s mobile dominance at risk as growth fails to keep up

This week the company released its third quarter financial results, the first since eBay since it announced it would spin-off PayPal. EBay’s stock was down yesterday following the financial results release as growth was not as strong as analysts had expected.

“EBay’ s mobile products are some of the best in the business in terms of quality and user experience,” said Adam Foroughi, co-founder and CEO of AppLovin. “But eBay needs to grow faster, acquire new users and reengage old ones in the face of slowing growth.

“They said they attracted 7.3 million new mobile customers in Q2 2014, up from 6.6 million,” he said. “Given mobile growth worldwide, a 10 percent growth is not enough for one of the world’s leading brands.

“It’s still early in the game for mobile, and eBay is one of the most recognizable brands in eCommerce. The opportunity to dominate on mobile commerce is theirs for the taking, they just need to make it happen.”

1B mobile transactions
Overall, eBay’s revenue was up 12 percent, with both eBay and PayPal experiencing double-digit customer growth to reach 152 million active buyers and 157 million active registered users, respectively.

Marketplaces mobile volume reached $7 billion, up 41 percent. EBay attracted 7.3 million new customers on mobile in the third quarter.

During the third quarter, mobile accounted 21 percent of the $63 billion in commerce volume enabled by eBay in the third quarter.

PayPal’s mobile payments volume grew 72 percent in the third quarter for a total of $12 billion and accounting for 20 percent of total payments volume. PayPal is on track to process 1 billion mobile transactions this year.

PayPal acquired 2.9 million active accounts in the third quarter.

Competition heats up
As PayPal faces growing competition in the mobile payments space – most notably the Apple Pay offering – it is looking for ways to continue to innovate in the payments space.

For example, in September, PayPal introduced One Touch payments, which the company claims is the fastest way to pay on any mobile device regardless of platform or payment method. One Touch is a new service that can be embedded in apps, enabling users to log into their PayPal account one time and be able to pay for products with one touch.

Once the spin-off of PayPal is complete, which is expected to happen next year, eBay plans for cooperation between the two companies to continue.

EBay also increasingly faces competition in the mobile commerce space from companies such as Facebook, which is moving into commerce, Google, with its Google Express delivery service and Amazon.

“Because eBay offers a giant marketplace where consumers can sell to other consumers in an auction format, mobile will always play a significant role,” said Wilson Kerr, vice president, sales and business development, with Unbound Commerce. “Consumers can simply not stay at their desktops through the entire sale process and place their bids.

“EBay was a leader in rolling out apps to ensure their service stayed front and center on the screens of smartphones,” he said.  “EBay’s expansion into the no more standard ‘buy now’ commerce realm has opened them up to attack from rivals.

“PayPal will certainly stay deeply ingrained has a component of the checkout process for eBay users. The fact that PayPal has spun off on a corporate level will likely have not much bearing on the day-to-day user experience for the average consumer.”

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