EBay 2015 Sales Forecast Tops Analyst Estimates Amid Mobile PushDanielle Kucera
EBay Inc. forecast 2015 sales that topped analysts’ estimates and said it expects the total volume of merchandise sold in its marketplace to reach $110 billion by that year as the online retailer adds users and mobile tools.
Revenue in 2015 will be $21.5 billion to $23.5 billion, the company said yesterday at a meeting with analysts in San Jose, California. Analysts on average had estimated sales of $21.4 billion, according to data compiled by Bloomberg.
Chief Executive Officer John Donahoe is adding features, including mobile applications and a local-shopping tool unveiled yesterday, to maintain a turnaround effort that has helped boost shares 75 percent since he took the helm from Meg Whitman in 2008. He’s aiming to sustain the pace of sales growth -- 21 percent last year -- and keep EBay relevant as it competes with the largest Web retailer, Amazon.com Inc.
“Investors want to know that there is a road map for strong growth, and management is delivering that message,” said Colin Sebastian, an analyst at Robert W. Baird & Co. “They are laying out multiple incremental growth opportunities, including local commerce, global expansion and, of course, mobile.”
The shares rose 4.1 percent to $54.22 at yesterday’s close in New York. The stock has advanced 6.3 percent this year, compared with a 10 percent gain for the Standard & Poor’s 500 Index.
By the end of 2015, 25 percent of users will be in developing regions, EBay said yesterday. As part of a push into new markets, the company said it debuted a Russian-language site two weeks ago. The country posted a 75 percent surge in EBay users last year.
“We are spending aggressively,” said Wendy Jones, vice president of geographic expansion and cross-border trade. “First priority is Russia -- it’s a big market, but it’s super-fragmented, and we were already the market leader. We have some wind in our sails in a very fragmented market. So we believe we have a window of opportunity.”
EBay has split emerging markets, including China, Russia and Latin America, into a separate division and has begun by working on a localized approach to Russia, starting with the new native-language site. The next step is sifting through fragmented shipping carriers and improving logistics, Jones said.
As it seeks new ways to lure members and sellers, EBay said that it’s building social features, such as one to help users find items for sale in a local neighborhood.
“Online commerce will not devour offline retail, but it will transform how we shop,” Donahoe said at the meeting. “Smart retailers are innovating. They’re reinventing and reimagining the store and what it means to shop.”
EBay’s local retail tracker comes as stores are increasingly turning to social-networking services like Facebook Inc. and Pinterest Inc. to promote brands and sell merchandise. Last year, EBay redesigned its homepage, adding a feature to show users products based on their personal information and purchasing history.
The company is also working on curating more content -- an approach that will let users follow themes, like “fashionista,” that will show relevant merchandise aggregated by an algorithm. EBay’s site, which already cultivates communities with similar interests -- auto enthusiasts and antique collectors, for example -- naturally facilitates social commerce, Donahoe said.
“There’s going to be an enormous jump around giving a consumer a more engaging, personalized experience,” Donahoe said in an interview. “We are absolutely focused on innovating and experimenting -- it’s a natural place for EBay to thrive.”
With users accustomed to commenting on pictures, Facebook and Pinterest have given companies ways to garner instant feedback for specific items. That lets them forecast production and design based on users’ requests -- something that hasn’t typically occurred on EBay.
EBay has made a push during the past three years to make the site accessible across all devices. That means more purchases are happening on smartphones and tablets. About 25 percent of users on EBay’s PayPal service are accessing the product via mobile devices, the company said. Payment volume for PayPal is forecast to double in the next three years, EBay said.
EBay expects to enable $300 billion in commerce volume by 2015, up from more than $175 billion last year.
“We’re moving from a business that’s dominated by a desktop-based act to a truly ubiquitous presence -- anytime, anywhere, any device,” Devin Wenig, president of EBay Marketplaces, said at the meeting.