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Why Is eBay’s Revenue Trend so Encouraging?

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How eBay turned the tables in 2016

E-commerce giant eBay’s (EBAY) current revenue trend is especially encouraging when we take into account how its core segment faces several challenges, including stiff competition from Amazon.com (AMZN), Groupon (GRPN), and the e-commerce sites of large retailers like Wal-Mart (WMT) and Target (TGT).

The chart below reflects that the company’s strategic initiatives are slowly showing results as eBay remains successful in transforming its business in 2016. The company’s revenue increased by 4% and 6% in 1Q16 and 2Q16, respectively, reflecting a sharp recovery from its dismal performance in 2015.

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The company’s better-than-expected revenue performance was driven by small but fast-growing businesses, including its StubHub and Classified segments, which are witnessing stellar growth. However, as eBay generates a significant amount of its revenues from international markets, the ongoing strength of the US (SPY) dollar has been somewhat negatively impacting growth.

Marketplace is slowly reviving

The company’s core Marketplace unit accounts for the majority of its revenue, but the segment was witnessing slow growth due to the challenges discussed above. Now, however, the company’s key segment is showing signs of revival, thanks to its strategic measures aimed at revamping Marketplace, including barcode scanning, vast product offerings, integrating more small sellers, product reviews, and improving its search engine optimization, or SEO.

In the next part, we’ll take a closer look at eBay’s key revenue drivers.

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