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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