Is Marketplaces Segment’s Contribution To eBay’s Total Revenue 70%, 80%, Or 90%?

eBay‘s (NASDAQ:EBAY) Marketplaces business, is expected to contribute $9.2 billion to eBay’s 2019 revenues, making up 79% of eBay’s $11.6 billion in expected revenues for 2019. The Marketplaces segment’s contribution to revenue is nearly 4x that of the Marketing and Advertising business. eBay is expected to add $2.6 billion in revenue between 2016 to 2019, out of which the Marketplaces segment is expected to provide $2.1 billion, that is 80.8% of the total expected increase. This Marketplaces segment revenue growth has been key to eBay’s 38% price appreciation since 2016. We discuss eBay’s valuation analysis in full, separately.

Below we discuss eBay’s business model, followed by sections that review past performance and 2019 expectations for eBay’s revenue drivers and competitive comparisons of its Retail revenue with amazon.

You can look at our interactive dashboard analysis ~ eBay’s Revenues: How Does eBay Make Money? ~ for more details.

eBay Business Model:

What does eBay offer:

• eBay, Inc. was formed in September 1995. The company has 3 platforms: Marketplace, StubHub, and Classifieds. These help buyers and sellers across the world connect with each other.
• The Marketplace platforms include online marketplace located at www.ebay.com, its localized counterparts and the eBay suite of mobile apps.
• The StubHub platforms include the online ticket platform located at www.stubhub.com, its localized counterparts, and the StubHub mobile apps.
• The Classifieds platforms include a collection of brands such as mobile.de, Kijiji, Gumtree, Marktplaats, eBay Kleinanzeigen and others.

Has 2 major Operating Segments:

• Net transaction revenues: They are derived principally from final value fees (which are fees payable on transactions closed on Marketplace and StubHub platforms), listing fees, and other service fees.

• Marketing Services & Others revenues: This consists of Marketplace, StubHub, and Classifieds revenue principally from the sale of advertisements, vehicles classifieds listing on Marketplace platforms, revenue sharing arrangements, classifieds fees, and marketing service fees.

What Are The Alternatives?

• Major competitors are Amazon, Alibaba, Walmart, and traditional marketplaces.

What Is The Basis of Competition?

• The competitive factors for the company would be the ability to attract, retain, and engage buyers and sellers, volume of transactions and price and selection of goods, trust in the seller and the transaction, customer service, brand recognition, website, mobile platform and application ease-of-use and accessibility, system reliability and security, reliability of delivery and payment, including customer preference for fast delivery and free shipping and returns, level of service fees, among other things. For how its revenue compares to its peers please visit our interactive dashboard – eBay’s Revenue.

Revenue growth expected in 2019 is primarily from growth in the Marketplaces segment.

• Total Revenue has grown at a good pace from $9 billion in 2016 to $10.7 billion in 2018 primarily pushed by the Marketplaces segment. Trefis estimates further growth of about 8.2% and Revenue to reach $11.6 billion in 2019.
• eBay Marketplaces segment has seen the highest increase in absolute and percentage terms and also contributes the maximum to Total revenue. The segment revenue increased from $7 billion in 2016 to $8.5 billion in 2018. Trefis estimates further growth of about 8.2% and Revenue to reach $9.2 billion in 2019.
• Marketing and Advertising business has seen a positive revenue growth over the years. Revenue grew from $1.9 billion in 2016 to $2.3 billion in 2018. Trefis estimates further growth of about 8% and Revenue to reach $2.4 billion in 2019.