eBay Opens A High End Furniture Shop: Can This Increase The Average Spend On Its Platform?

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As it looks to become a marketplace for unique curated inventory, eBay (NASDAQ:EBAY) recently launched “eBay collective” — an elevated shopping experience to provide interior designers and consumers with curated inventory of furniture, antiques, contemporary design and fine art.  Aimed at attracting consumers who are looking for unique pieces of furniture or a one-of-a-kind piece of art work, this platform has been designed to meet eBay’s criteria of a high quality shopping experience. The company has also integrated its “Shop The Look” artificial intelligence technology on this platform, which allows shoppers to cursor over an image to activiate searches in the eBay Collective for matching inventory. Targeting high end shoppers with unique inventory and antiques can potentially increase the average spend per active user on eBay’s platform, which is a key driver of its valuation. We believe these initiatives to attract high end shoppers on its platform can drive profitability for eBay in the long term.

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10% Upside To Our Price Estimate If Average Spend Per Active User Increases By 20%

As per our estimates, “Average Spend Per Active User” on eBay’s platform will increase moderately from $508 in 2016 to $518 by the end of our forecast period.

As eBay works towards building unique inventory of high end items, this rare collection of goods can attract more buyers to its platform who are likely to spend higher amounts to acquire these expensive items. If through this initiative the company is able to attract high end shoppers to its platform and the average spend per active user increases rapidly reaching around $610 by the end of our forecast period, there can be a 10% upside to our price estimate.

eBay is looking to make eBay collective the destination for one of a kind objects that can traditionally only be found only in independent brick and mortar stores. This should appeal to the section of consumers who are looking for rare collectibles and can now shop for them conveniently through eBay’s platform. Through artificial intelligence technology the company is also looking to make it even easier for buyers to search for inventory depending on an image they have in mind.

One of the key pillars of eBay’s turnaround plan is to become the marketplace for unique inventory which cannot be found easily in stores or online. We believe eBay Collective is a step forward in this direction.. If through a curated collection of items eBay is able to attract high end shoppers, it can impact the company’s valuation positively in the long term.

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