Why eBay’s competitive dynamics changed in the 3rd quarter



Competitive pressures on eBay increased in the third quarter

In the previous part of this series, we discussed eBay’s (EBAY) 3Q14 earnings preview and how the company continues to underperform the broader e-commerce market. But, in the third quarter, competitive dynamics changed for eBay. Alibaba (BABA) came up with an initial public offering (or IPO) in the U.S., which valued the company at $231 billion. This valuation is more than the combined valuation of eBay and Amazon (AMZN), which underscores its importance in the global e-commerce market.

A few months back, Google (GOOG)(GOOGL) also started its same-day shopping service named Google Shopping Express service. This service has gained momentum as Google has started to expand its service to a number of cities in the U.S.

Mobile payment transaction value

Apple Pay service is a major threat to PayPal

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In the third quarter, Apple (AAPL) introduced the iPhone 6 and iPhone 6 Plus and its mobile payment system. Analysts expect the mobile payment market to show strong growth. According to a recent report from eMarketer and as the chart above shows, the mobile payment transaction in the U.S. is expected to more than double from $1.6 billion in 2013 to $3.5 billion in 2014. Analysts expect this market to continue to grow at a healthy rate.

Apple might have played an important role in influencing eBay’s decision to spin off PayPal. After all, the main reason for the spinoff was for both eBay andPayPal to focus on their respective strategies. PayPal needs innovative and fresh thinking to combat its competitive threats.


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