A Prime Alternative in PayPal

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

PayPal is already willing to stand up to MasterCard and Visa as a viable payment alternative in brick-and-mortar stores; now it plans to take on the giant of Internet retailing, (NASDAQ: AMZN  ) , and come after it where it can have a big impact: shipping.

The eBay (NASDAQ: EBAY  ) subsidiary just announced it's running a limited-time offer to give free two-day shipping for online purchases at nine different retailers. With no minimum purchase amount and no fees, PayPal is willing to go head-to-head with Amazon's Prime, which lets you get "free" shipping for a $79 annual fee.

Sort of. As mentioned, there are only nine retailers participating in the promotion at the moment, including Aeropostale, Dick's Sporting Goods, and Levi's, which is just a fraction of the partners Amazon has in its stable, or the thousands of retailers ShopRunner offers -- but there's nothing to suggest it's a service that can't grow over time if successful. 

Moreover, as retailers themselves explore more ways to enhance the shopping experience with free ship-to-store alternatives such as those developed by Wal-Mart and more recently Target, it's clear that getting a product from the computer screen to the customer's hand is becoming key to closing the sale.

This seems to be part of an under-the-radar move by eBay to become an integral part of the online shopping experience, moving beyond its role in online auctions. In addition to this pilot program and PayPal's appearance at store registers, it's also expanding its BillMeLater lending service through private-label credit cards issued by partner Alliance Data Systems; developing its eBay Now same-day delivery service to compete against Google's Shopping Express and, to a certain extent Amazon, which is building out its own distribution center network to be closer to its customers; and gaining greater expertise in mobile payments with its recent acquisition of Braintree. 

At 27 times earnings, eBay might seem pricey compared to its rivals; however, take into account analyst estimates of its growth prospects, and suddenly a multiple of 17 times future earnings makes it look more attractive than Amazon or even

Shares have swung broadly between $50 at the bottom and $57 at the top for most of the year, topping and bottoming several times as investors take measure of what the online auctioneer is attempting to achieve. As it rolls out these new initiatives and makes its services more vital and sticky with consumers, the cumulative effect is calculated to add up over time.

With no let-up in sight for the growth of e-commerce, especially as we approach the prime holiday shopping season -- Black Friday shopping topped $1 billion for the first time ever last year -- and the broad appeal of mobile payment options, becoming the place to turn to for fast, reliable, and cheap delivery will make eBay's financial services sector an even more valuable asset to consumers -- and perhaps its stock more valuable to investors.

Tech is the answer to everything
The tech world has been thrown into chaos as the biggest titans invade one another's turf. At stake is the future of a trillion-dollar revolution: mobile. To find out which of these giants is set to rule the next decade, we've created a free report called "Who Will Win the War Between the 5 Biggest Tech Stocks?" Inside, you'll find out which companies are set to dominate, and we'll give in-the-know investors an edge. To grab a copy of this report, simply click here -- it's free!

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2669358, ~/Articles/ArticleHandler.aspx, 9/25/2016 7:03:42 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,261.45 -131.01 -0.71%
S&P 500 2,164.69 -12.49 -0.57%
NASD 5,305.75 -33.78 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/23/2016 4:00 PM
EBAY $32.07 Down -0.21 -0.65%
eBay CAPS Rating: ****
AMZN $805.75 Up +1.05 +0.13% CAPS Rating: ****