June 1, 2012, 12:00 AM

eBay turns to technology

(Page 2 of 3)

Also included in its revenue rise are the new businesses eBay acquired last year, notably GSI Commerce, which contributed $590 million. If eBay plays its cards right, it could be headed for a strong future as a major enabler of retail e-commerce, industry experts say.

It's certainly taking a bullish approach to technology and related personnel investments, increasing its spending on new technology development last year by 36%, to $1.23 billion from $907.50 million. That includes spending on improving site search, product data, mobile commerce, and its overall e-commerce platform, according to eBay's 2011 financial statement filed with the U.S. Securities and Exchange Commission.

"While still early days, we view X.Commerce and eBay's billion-dollar annual investments in technology and products as a significant initiative, which may turn eBay into the leading commerce platform," Internet stock analysts Colin Sebastian and Gregor Schauer at Robert W. Baird & Co. wrote in a Baird Equity Research report last month.

EBay executives say the benefits of such investments will play out as the company increases how its operating units—e-marketplaces, payments, and e-commerce technology and services led by GSI, Magento and X.Commerce—complement one another. Indeed, such coordination is already beginning to bear fruit, executives say. Since acquiring GSI last summer, for example, eBay has added eight GSI merchant clients to the eBay.com marketplace, bringing the total number of GSI retailers selling on eBay to 13.

That's not a huge number, but it includes some well-known retail chains, including GSI clients Toys 'R' Us and Dick's Sporting Goods, extending eBay's reach beyond its traditional small independent sellers.

Likewise, PayPal is becoming a more common payment option on GSI merchant web sites. As of the end of last year, PayPal was available for 89% of GSI purchase volume and accounted for 13% of online checkout volume, eBay says.

GSI, meanwhile, contributed $363.6 million to eBay's total revenue in the fourth quarter of 2011, its first full quarter under eBay's ownership.

More mobile and social

And eBay says it's just getting started with its expanded reach in e-commerce. "We're even more excited about the opportunities ahead," chief financial officer Robert Swan says.

Among other new developments causing excitement: EBay's aggressive moves into mobile commerce with mobile apps. The company reached $5 billion in gross merchandise sales through mobile devices last year, and it's on course to hit $8 billion this year, Marks says. Mobile commerce growth is also benefitting PayPal, which expects to process $7 billion in gross mobile payment volume this year, up from $4 billion last year, he adds.

EBay and its technology partners expect mobile commerce to continue to grow quickly, and they are moving quickly to reach consumers using their mobile devices as comparison shopping devices in stores. For example, online shopping site operator The Find Inc. took advantage of the X.Commerce system of linking applications to integrate its database of some 450 million consumer products with eBay's RedLaser mobile shopping app. That means shoppers that scan a bar code with their phones can get more information, including on pricing, from the e-commerce sites TheFind trolls for product data. The app also incorporates eBay's Milo tool for accessing information on available inventory in some 50,000 stores throughout the United States.

But while the RedLaser app enables consumers to scan store items and search for products at other retailers, it can also be designed to help retailers stand out among the crowd. TheFind and eBay began offering the mobile shopping app late last year to GSI client Toys ÔR' Us through ShopRunner, a former GSI shipping services operation in which eBay has retained a large minority ownership stake.

As consumers search for products on the app, it will show them Toys 'R' Us products online or in stores they can order with ShopRunner's free two-day shipping or arrange for pickup at a nearby Toys 'R' Us store, says Ramneek Bhasin, vice president of mobile for TheFind. The app also lets the shopper pay with stored PayPal account information, and it lets the retailer push store coupons to customers' mobile devices as they enter a Toys 'R' Us store.

More recently, the RedLaser app has also been put to use outside of ShopRunner by consumer electronics retailer Best Buy Co. Inc. In addition to the ability to search for products at BestBuy.com or in Best Buy stores, the app developed for the consumer electronics chain will serve up relevant textual ads for Best Buy when a shopper searches for products that Best Buy sells.

Next up will be more integration with social media, providing more personalized marketing and merchandising based on social media content. "Our next set of apps will be extremely social media-savvy," Bhasin says.

Daily deals

Along with all the growth avenues at eBay is a noticeable upgrade in the company's marquee brand, the eBay.com marketplace. Click to the site's home page, or land on an eBay product category page through an Internet search, and you'll wind up on a page with a helpful layout of product images and listings, outlined by easy-viewing light gray colors on a largely white background—a decidedly more elegant and shopper-friendly interface compared with eBay.com's former red and orange color highlights and long lists of auctions.

Also, about 64% of the products offered for sale on eBay.com are now at fixed prices, rather than sold at auction, a format many consumers have tired of. That makes the site appear even more like a conventional online retail site. And its pages call out with the kind of retail offerings and services that Donahoe views as crucial for eBay to be competitive: eBay Buyer Protection, Daily Deals, Free Shipping.

Its pages also prominently feature payment options from eBay's PayPal and BillMeLater, which allows consumers to pay over time. Technology from Hunch, another eBay acquisition, tailors product views to shoppers' past shopping interests.

EBay says it's also working on ways to provide better fulfillment services for eBay merchants, though details for now are few. "We're looking at how GSI fulfillment capabilities could serve a broader range of retailers, and how we can partner with eBay sellers to effectively manage shipment and fulfillment," Marks says. That's an area eBay will have to address if it's to compete with Fulfillment by Amazon, which handles warehousing and delivery for retailers, including many that sell through Amazon.com.

comments powered by Disqus




From The IR Blog


Terri Mock / E-Commerce

How online jewelers fared this Valentine’s Day

The key takeaway: Start early, because sales tail off in the last few days before ...


Cynthia Price / E-Commerce

4 tips for improving email marketing results

Every piece of data you collect can help you serve your audience exactly what they ...