eBay shows strong growth but the competition is rising (Part 3 of 8)
Despite strong growth, mobile is still not a big contributor for eBay
During the company’s conference call to announce its Q1 2014 earnings, eBay’s (EBAY) management highlighted the progress it’s making in four competitive battlegrounds—mobile, local, global, and data. Management mentioned that in mobile, PayPal and eBay continue to lead, as it enabled $11 billion of mobile commerce in Q1. This volume grew 70% year-over-year as eBay added 6.5 million new customers via mobile. Although the mobile commerce growth for eBay has been strong, it still constitutes only 19% of eBay’s total commerce volume, as eBay enabled a much bigger $58 billion of total commerce volume in the first quarter.
Why mobile usage for eBay is still low compared to other Internet companies
As the chart above shows, the mobile usage for companies like LinkedIn (LNKD), Yahoo (YHOO), and Facebook (FB) is close to 50%, while that for Twitter (TWTR) is 80%. We can see eBay’s low mobile usage from the fact that people have not yet become comfortable in processing transactions on mobile. People either don’t find it convenient to enter their credit card details on small mobile screens or don’t feel secure enough to reveal these details on mobile. For other Internet companies, people mostly use mobile to view social or news updates and that’s why the mobile usage is higher for these companies.
The mobile Internet advertising market shows strong growth
Internet companies have realized that mobile is the future of the device market, with the PC market undergoing a structural decline. Recently, eMarketer came out with a report underlining the value of a presence in the mobile space. According to the report, global mobile ad spending increased from $8.76 billion in 2012 to $17.96 billion by 2013—an increase of 105%. This is projected to increase by another 75%, to $31.45 billion, by 2014, accounting for nearly one-fourth of total digital advertisement spending. This market could continue to show strong growth and reach around the $100 billion mark by 2018.
Browse this series on Market Realist:
- Part 1 - eBay shows strong growth but the competition is rising
- Part 2 - eBay announces the end of its proxy war with Carl Icahn
- Part 4 - eBay’s new initiatives to increase its presence on mobile devices
- Information Technology