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eBay's Retail Revolution Is a Game-Changer

Three innovative, dare I say game-changing, eBay (NASDAQ: EBAY  ) initiatives give investors renewed reason to invest in the company. Digital storefronts, a hands-free shopping Beacon, and eBay Now all open up new revenue streams for the company.

Bridging clicks and bricks
eBay is changing the face of retail with touchscreens allowing shoppers to just touch and pay with eBay's PayPal. 

Source:Fifth & Pacific

First with Kate Spade in Manhattan in June and then TOMS, Sony, and Rebecca Minkoff digital storefronts in Frisco this holiday season, eBay is redefining window shopping. Bridging the divide between bricks and clicks, these windows make money for eBay.

Shoppable windows offer 24 hour access. Shopping malls can optimize unused shopfronts with touchable screens. As eBay's blog explains," interactive glass technology allows retailers to think about cubic versus square feet for their retail shops."

Retailers pay eBay twice, as a percentage of sales and then again, per click per product whether a customer buys or not. However, each click gives a retailer valuable info on what intrigues customers, etc.

This is not just a pilot program for eBay. The company has applied for further patents and visualizes applications like in car connected glass for use at fast food restaurants and other drive through locations.

But can it make a maître d' smile?


My daughter used to pretend she ran a restaurant where you don't need money. eBay just made her dream come true. Beacon, a device the size of a nightlight that plugs into any power outlet, will revolutionize restaurants and retail if widely adopted. PayPal's President David Marcus explains,

"You can be greeted by name. Paying only requires a verbal confirmation, and you're done. No wallet. No card. Nothing to do. Not even touching your phone."

Now, everyplace can be Cheers, where everybody knows your name.  About the only thing Beacon can't do is make a maître d' smile.

Naturally, this lucrative mobile frontier attracted competition with Apple (NASDAQ: AAPL  ) getting in the game with iBeacon. It uses Bluetooth Low Energy mobile technology like eBay. Already Apple has adopted it in its retail stores as has Macy's in NYC and San Francisco.  But retailers and restaurants may prefer eBay's device as it can be used with Android and iOS.

Shutl off to Buffalo
eBay purchased Shutl in October. This is a service which expedites delivery from online purchases by finding the most efficient delivery system in a geographic area. This supports its eBay Now service which launches in 25 cities by year end of 2014 (Buffalo, maybe?).

Another bridge between clicks and bricks, eBay Now allows customers to order merchandise from bricks and mortar retailers like Macy's, Walgreen's, etc. through eBay with a promise of one hour delivery and a $5 delivery fee.

According to Tom Allason, CEO of Shutl, "Approximately 75% of commerce happens within 15 miles of the consumer's home. E-commerce is quick and convenient, two things that delivery is not." Shutl is another arrow in eBay's quiver to compete with Amazon (NASDAQ: AMZN  ) and its constant improvements to delivery speeds.

By hitching its star to bricks and mortar retail, eBay has found a niche that Amazon will find hard to enter . At the December Silicon Valley Summit eBay's Paul Todd, strategy chief of Marketplaces, said  eBay Now can particularly help small business not just by offering local delivery expedited by Shutl, but also with invaluable customer data like shopping history.

Short term vs. long term
eBay's stock has been stuck in the $50s much like Apple in the $550s. However, these three initiatives could pay off big longer term for eBay investors. iBeacon is likely not the needle mover for Apple that Beacon will be for eBay.

As for shoppable windows there is no competition for eBay on that score. eBay Now is also promising as it offers the omnichannel solution that retailers desperately seek.

It's still early days for these strategies. eBay hasn't predicted any numerical impact on earnings but Cantor Fitzgerald named eBay its top Internet value pick for 2014. Although Apple trading at a forward earnings multiple of 11.4 with a 2.2% yield may be more a value play, eBay's forward multiple at 17 compares quite favorably. Amazon has already run big this year and its forward multiple is 148.

Even without these three, eBay has been humming along reporting a strong third quarter in October. Still, these initiatives will certainly help eBay achieve stunning returns long term.

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  • Report this Comment On December 21, 2013, at 5:47 AM, PhilipCohen wrote:

    “eBay’s Retail Revolution Is a Game-Changer”—Another load of nonsense from the eBay Dept of Spin ...

    Regardless, only in Johnny Ho's dreams …

    The only measure of a listed company’s success is its share price; Johnny Ho is now in the seventh year of his “three-year turnaround” of eBay, he’s spent a whole lot of shareholders’ funds, and still there is little sign of any improvement.

    So, what does the “smart money” on Wall Street think about eBay? Well, in late 2007 both eBay’s and Amazon’s stock prices were ~$40; now, with the US stock market at an all time high, eBay is still only ~$54 and Amazon is ~$403. What more telling data does anyone need to know that Johnny Ho has been an unmitigated disaster for all concerned, except for himself, of course?

    Since “Chairman Ho” arrived on the scene, eBay’s long-suffering long shareholders have, relatively speaking, been effectively going backwards—at a quite steady rate of knots—notwithstanding the nonsense that constantly spews from the eBay Dept of Spin …

    The only people making any money out of eBay are Johnny Ho and the gaggle of like-bodied headless turkeys that he has surrounded himself with, and with whom he apparently spends all day blindly running around in circles with in the eBay executive suite.

    And I have to wonder if Pierre Omidyar has ever thought about just how much wealthier he might now have been had he not ok'd the handing over of the control of eBay to this incompetent, unscrupulous, narcissistic sociopath, Johnny Ho?

    Clearly, the message from the smart money on Wall Street is that eBay Inc. is a "dog" and Johnny Ho is an utterly incompetent dog handler ... bit(DOT)ly/11F2eas

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