Originally rising to prominence as one of the darlings of the original tech bubble, eBay (NASDAQ:EBAY)proved last year that its days of generating massive returns for shareholders are far from behind it. However, the eBay investors find today looks barely recognizable when compared to its original online auction business model -- and that's a good thing. Thanks to a set of savvy business decisions, eBay has refashioned itself into an e-commerce powerhouse to rival online megastore Amazon. However, after putting up some amazing numbers in 2012, does eBay still have what it takes to keep investors happy? The Fool recently created a premium research report that breaks down in clear detail each facet of eBay's online empire. To help inform our readers, we've included a brief excerpt from this report in the text below. Enjoy!
The three areas you MUST watch
As good as things have been going for eBay lately, things can get even better.
Let's go over a few catalysts for potential growth.
PayPal is a bricks-and-mortar difference maker: eBay's dominant transactions enabler is making a difference in the retail world. The move started when Home Depot began accepting PayPal at its registers back in February. PayPal announced three months later that it would be adding 15 more national retailers to its platforms. These should all be familiar companies. We're talking about Abercrombie & Fitch, Advance Auto Parts, Aeropostale, American Eagle Outfitters, Barnes & Noble, Foot Locker, Guitar Center, Jamba Juice, J.C. Penney, Jos. A. Bank Clothiers, Nine West, Office Depot, Rooms To Go, Tiger Direct, and Toys R Us. The good news doesn't end there. Earlier this year eBay announced a partnership with Discover Financial Services, opening up PayPal access to more than 7 million merchant locations. As CEO John Donahoe points out, PayPal is going from addressing the $500 billion a year e-commerce market to mining for opportunities in the far larger $10 trillion retail market.
eBay is becoming a more traditional online retailer: Early eBay users may remember the site as the mother of all garage sales. Folks would empty out their attics to unload old baseball cards, Pez dispensers, and autographed memorabilia. Deal seekers can still find these items on the site, but the influx of entrepreneurs launching cottage industries and traditional merchants looking for a new outlet have redefined eBay. Remember the rush of bidding on items as the clock ticked lower? Well, two-thirds of the gross merchandise volume these days is actually being generated through fixed price deals. Along with initiatives to get sellers to speed up their deliveries, offer free shipping, and widen return windows, eBay will be far more competitive with Amazon.com and smaller online retailers this holiday season.
Mobile is an asset and not a liability: A popular knock on online companies these days is the challenge to monetize mobile usage. Google and Facebook are serving up a ton of ads on mobile phones, but investors fear that the smaller screens translate into fewer slots to place their money-making ads. Many also believe that smartphone owners aren't going to be clicking or engaging with as many ads as PC users have in the past. This may all be true, but eBay's seeing nothing but opportunities as the smartphone migration continues. PayPal expects $10 billion in mobile payments this year. Sellers are listing 2 million items a week through their smartphones, and roughly 800,000 eBay users completed their first mobile transaction during the quarter.
Longtime Fool contributor Rick Aristotle Munarriz owns shares of Jamba. The Motley Fool recommends Amazon.com, eBay, Facebook, Google, and Home Depot. The Motley Fool owns shares of Aeropostale, Amazon.com, Facebook, and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.