Friday, January 22, 2021

Online Retailer Ebay Likely To Continue Recent Growth Post-Pandemic

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Since the beginning of the year the eBay Inc. (EBAY) has risen more than 37%. The company’s growth was supported by the closing of shopping centers and a boom in online shopping around the world due to COVID-19. But in a few blocks, the pandemic will probably stop. Will e-Commerce site be able to sustain high rates of growth then?

EBay is the third largest e-Commerce site in the United States by gross merchandise volume after Amazon and Shopify. The business models of all three firms however are distinct. The absence of its own items (the company unites only buyers and sellers) as well as the selling of goods through auctions are the peculiarities of eBay. The company saw a rise in revenue during the COVID-19 period, like many other online retailers. The number of active eBay buyers rose by 5 percent year-on-year last quarter, to 183 million. The platform’s total amount of products sold rose by 22 percent to $25 billion. Revenue hit $2.6 billion, up 25% year-on-year.

EBay management predicts that temporary growth associated with COVID-19 will slow as buyer mobility returns. At the same time, some analysts assume that the pandemic in the long run has altered the essence of the retailer. This can be judged by the “Black Friday” recently held. Traffic on Black Friday 2020 was the lowest in the last 15 years, according to KeyBanc. For this, there were many explanations. In early November, several retailers advertised discounts, so consumers arrived in advance for the requisite items. Furthermore, COVID-19 compelled some buyers to offer e-Commerce preference. Adobe, which monitors online shopping traffic, saw e-Commerce revenues rise by around 20 to 30 percent this year on Black Friday.

The convenience provided by e-Commerce is too apparent and the new generation of consumers views it positively. Most possibly, well after the pandemic, a significant portion of consumers would not return to stores. For eBay, this provides a desirable business climate. The management of the company states that because of the increased speed of sales and the development of an active customer base, the platform was able to achieve some improvement in performance.

This year, eBay expects revenue to increase 19-20 percent and earnings per share (non-GAAP) to rise 18-20 percent, powered by positive sales growth expectations in the pre-holiday season.

But eBay alone does not appear to be the main beneficiary of e-Commerce development. In certain areas, the firm is inferior to its rivals. New customer behavior models, however can help the platform maintain the attention of buyers and sellers. EBay Inc. (EBAY) closed the Wednesday trading at $49.50.

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