eBay shops for marketplace volume

Can the online auctioneer take down rival Amazon?

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

By focusing on global expansion, mobile applications and local commerce as sources of growth, online trading community giant eBay (NASDAQ: EBAY) is aiming to handle US$110 billion of sales volume and a Gross Merchandise Volume (GMV) of US$101 billion by 2015, in a bid to compete with rival Amazon.com (NASDAQ: AMZN).

For a number of years, eBay struggled to coexist beside Amazon, which became the more dominant online marketplace, seeing eBay shares plummet roughly 83% to US$10 between 2005-09.

Since that time however, chief executive John Donahoe has implemented a number of changes, seeing the company transform from a ‘muddled auctions website’ to a market where users could easily purchase items at fixed prices and in a more convenient way through mobile application.

Promising “at least” market rates of growth, Donahoe insists that the company’s core marketplace has been fixed. Despite the impressive resurgence of the online marketplace business since 2009 however, Donahoe’s work is not yet complete.

eBay has estimated that, by the year 2015, 25% of the website’s users will reside from the BRIC countries – Brazil, Russia, India and China. Recognising this potential, eBay aims to increase sales by four times their current levels in those nations in that time. The company will push the use of mobile applications and PayPal as a payment method to increase consumer convenience in order to achieve this goal.

Whilst eBay’s 2012 revenue amounted to US$14 billion and its EPS was US $2.36, expectations on Wall Street are that the company will achieve US$21.16 billion in revenue and an EPS of US$3.98 by 2015.

The dominance of companies like eBay and Amazon.com have forced brick and mortar companies such as Myer Holdings Limited (ASX: MYR), JB Hi-Fi Limited (ASX: JBH), and Harvey Norman Holdings (ASX: HVN) to create online stores, to compete with pricing and convenience for consumers.

Foolish takeaway

eBay’s forecast has come at the same time as Amazon’s announcement that it will purchase book recommendations website Goodreads. Whilst eBay has certainly solidified itself as one of the largest and most popular online global marketplaces, the Australian Financial Review states that concern remains amongst analysts and investors that the company’s growth may struggle to keep up with the overall expansion of the online retail sector.

Despite being a very good business with a strong management team, investors would be wise to monitor eBay’s overall market share and ability to continue delivering on its estimates.

In the market for more top shares? Chances are even if you don’t own Telstra shares directly, your superannuation fund does. But with its share price skyrocketing over the past year, is Telstra past its prime? Click here for our brand-new FREE report: Buy, Sell, or Hold Telstra?

More reading

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

asx share price competitions represented by businessmen arm wrestling
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

person reading news on mobile phone
⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »