eBay (NASDAQ:EBAY) sprung a surprise on Tuesday when it reported that mobile shopping on Sunday, December 2, outpaced that on Cyber Monday and Black Friday for eBay Marketplaces and PayPal.  PayPal’s global mobile payment volume on Sunday exceeded those on Cyber Monday by $1 million, and the company now expects the trend to continue through the holiday season. 
We believe customers that are looking to avoid the holiday rush at stores and instead shopping from the comfort of their homes is what is driving this growth. The mobile device penetration in the US is estimated to grow from 78% currently to over 80% next year. We expect PayPal and Marketplaces to improve their Sunday performance during the holiday season as more people turn to eBay for last minute shopping.
Mobile device penetration helps eBay’s cause
Mobile devices accounted for about 25% of online shopping this November. With more than a million downloads of eBay apps and online shopping in the US growing at about 15% during the holiday season so far , m-commerce presents a huge opportunity for eBay Marketplaces. Long term, the mobile penetration in the US, currently estimated at around 78% and growing at 3% y-o-y, will help eBay solidify its retail presence. Going forward, the growing 3G services penetration, estimated at about 47% by KPCB, should make it easier for the company to tailor services for its customers through its apps and further drive growth. Meanwhile, m-commerce has been growing exponentially in comparison to e-commerce’s linear growth and should soon have more than 5% share of the total US retail market. 
Preferred destination for last minute shopping
Widely acknowledged as a marketplace for re-sellers, eBay marketplaces is the preferred destination for last minute shopping. The wide reach of its apps and growing mobile penetration means that it’s easier for shoppers to make last minute purchases. A strong demand for out-of-stock items arising out of early shopping could result in upside to the number of listings on eBay Marketplaces. The company doesn’t stock items and has fixed charges on listings. Hence, an increase in the number of listing should help Marketplaces grow revenues.
The mult-ifold increase in transactions over eBay leads us to believe that eBay is trying different things, and its efforts at marketing and developing mobile apps are showing results. The primary reason behind eBay’s success is the popularity of its mobile apps and PayPal focusing on expanding its offline presence. With PayPal reporting a multiple increase in global payment volumes on both Thanksgiving and Cyber Monday, we now expect PayPal to lead revenue growth for eBay in Q4.
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We currently have a $50 Trefis price estimate for eBay, which is at par with the market price.Notes:
- Consumers Drive New Records for eBay Inc Mobile Engagement, eBay Ink, December 2012 [↩]
- Mobile is Bigger than Ever, Transforming the Holiday Shopping Calendar, PayPal, December 2012 [↩]
- Cyber Monday Spending Soars to $1.46 Billion, Ranking as Heaviest U.S. Online Spending Day in History, comScore, November 2012 [↩]
- 2012 Internet Trends, KPCB, December 2012 [↩]