What Are The Key Growth Drivers For eBay?

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eBay‘s (NASDAQ:EBAY) stock rose after it delivered better-than-expected Q3 2015 results. There were several concerns around eBay’s future following its split with PayPal; however, the strong results, w first since the split, are encouraging. The company’s management has taken several initiatives to accelerate eBay’s growth.  We believe that enhancing seller experience, along with focusing on measures to improve organic traffic (via product cataloging), are the key drivers for eBay’s long term growth. The company is also focusing on specific customer segments and is using innovative techniques for faster delivery. We believe this strategy would enable it to combat growing competition from other large and niche e-commerce websites.

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Measures To Increase Organic Traffic

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In its 2015 seller update, eBay introduced a few changes to its listing requirements whereby sellers are required to include product identifiers for listings in certain categories. According to eBay, this will help shoppers find products more easily and will also increase product exposure in Google search results. Managing search engine optimization (SEO) processes that help govern organic traffic on eBay has been a tough task due to millions of seller generated listings. The introduction of product identifiers should make this easier and improve the SEO process, thereby boosting organic traffic. eBay is also working on improving the compatibility of its listing descriptions for mobile devices given that an increasing number of transactions now happen on handheld devices. Noting that the company is also using social platforms such as Facebook and Pinterest to boost traffic, we believe measures to optimize searches to increase organic traffic will be key for eBay’s future growth.

Enhancing Seller Experience

Sellers on eBay are key to eBay’s business since the availability of a healthy mix of products in the marketplace is dependent on the number of sellers. The company changed several seller policies over the years, causing dissatisfaction among sellers. Recently, the company has stepped up its efforts to improve seller experience on its platform by introducing “Seller Hub”, a platform which provides analytics and product management tools for sellers, and by expanding “eBay Valet”, its intermediate selling service. We believe enhancing seller experience with more tools for data analysis and ease of use will be instrumental for eBay’s growth in the future.

Limiting Deal Categories And Faster Delivery

eBay has been traditionally targeting the entire Internet audience with a wide variety of products. With increasing competition both from established e-commerce websites such as Amazon and niche players in specific product categories, eBay is now focusing on certain key customer and deal segments to retain and grow its market share. According to a report from the Wall Street Journal citing local press in Germany (EWG), eBay could be testing a same-day delivery program in Germany. This program will be called eBay+. The company seems to have realized the importance of faster delivery and is taking measures to catch up with other players who already offer this service. According to a report from Business Insider’s BI Intelligence research service, the US same-day delivery market could grow from $100 million in 2014 to $4.03 billion in 2018 at a CAGR (compound annual growth rate) of 150%.  Focusing on selective customer categories and faster delivery options is another key growth driver for eBay.

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