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Why eBay Is Acquiring Terapeak

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eBay and Terapeak

In a move that could spark more marketplace competition among e-commerce providers, eBay (EBAY) is acquiring analytics firm Terapeak to help its Marketplace sellers optimize their listings for maximum performance.

eBay didn’t disclose how much it was paying for the acquisition of Terapeak. Terapeak analyzes supply, demand, and pricing data to help vendors make informed decisions on what to sell and how to price it. With this information, eBay could help its Marketplace sellers make more sales and in turn, generate more revenues for the company.

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Marketplace supplied 79% of revenues

eBay operates three revenue segments: Marketplace, StubHub, and Classifieds. Marketplace is the largest of these segments, representing 79.2% of eBay’s overall revenues in 3Q17.

In its Marketplace segment, eBay makes money by charging merchants a commission on sales they make on its platform. Amazon (AMZN) and China-based (MCHI) Alibaba (BABA) also provide marketplace services.

In addition to commissions on sales, Marketplace operators with native payment services such as Amazon and Alibaba also make money by processing payments for their marketplace sellers.

As such, eBay Marketplace is an important source of revenues for e-commerce operators. As a result, there is fierce competition for the attention of online sellers.

More merchants equals to more revenue

If Terapeak insights could enable existing eBay merchants to sell more, this could help eBay to attract more merchants to its platform and boost its revenues. PayPal (PYPL) processes payments for eBay sellers, and eBay has a stake in PayPal.

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