Receive the latest articles for free. Click here to get the Mobile Commerce Daily newsletters.
Strong sales, merchant customer acquisitions drive PayPal mobile growth: EBayBy
EBay said mobile is accelerating thanks in part to PayPal’s growth, with the division posting its first billion-dollar revenue quarter.
During a conference call with analysts, eBay executives said strong sales and new customer acquisitions for merchants is driving growth for PayPal Mobile. The company expects to generate more than $3 billion in mobile payments volume this year.
“EBay has a full on attack and approach to mobile enabled payments,” said Mark Beccue, senior analyst at ABI Research, New York. “It is growing for them.”
PayPal is an important driver of this growth.
“There is clearly a lot of focus with the company on the PayPal portion,” Mr. Beccue said. “The results show that close to 40 percent of eBay’s overall total payment volume came from PayPal.”
Anywhere, anytime advantage
In the second quarter, Ebay’s overall revenue increased 25 percent for a total of $2.8 billion for the second quarter ended June 30.
PayPal reached 100.3 million active registered accounts, a 15 percent year-over-year increase, during the same period.
In a conference call with analysts, eBay executives discussed the growing expectation to be able to shop across multiple channels.
Being able to connect with consumers anytime and anywhere provides an advantage here.
Several recent eBay acquisitions were singled out during the call for how they will strengthen PayPal’s mobile and digital portfolio. In particular, Where and Zong will help eBay strengthen its position in mobile commerce and payments.
EBay’s auction business continues to be a significant driver of its mobile payments business.
“I think that a lot of PayPal mobile payments are still coming through eBay auction,” Mr. Beccue said. “My guess is that between 60 percent and 80 percent of their mobile dollars is coming from eBay auction.
While eBay auction is likely to continue to fund mobile going forward, per Mr. Beccue, a significant portion is coming international markets where there is low penetration of credit cards.
While mobile is growing for eBay, it is a small percentage of the overall payments volume. PayPal processed $92 billion in payments in 2010 and the $3 billion projected to come from mobile this year is a drop in the bucket in comparison.
Still, PayPal’s role in the overall mobile payments space is growing.
“My estimate for this year for mobile online shopping worldwide is between $44 and $47 billion,” Mr. Beccue said. “So, $3 billion is a bigger percentage here.”
Room to grow
No one is dominating the mobile payments space so far, which means there is opportunity for PayPal here.
“The mobile payments market is fragmented and there is no individual company dominating when it comes to volume,” Mr. Beccue said.
EBay has taken a couple of steps to help it grow in mobile payments, including launching Mobile Express Checkout, which enables merchants to enable PayPal payments on a mobile optimized Web site.
EBay also said it will be testing a new point-of-sale innovation with a major retailer before the end of the year and expects to roll out point-of-sale solutions with up to 20 national retailers next year. This could have a mobile element.
The Marketplaces business also helped drive growth in mobile for eBay, with downloads of its mobile applications surpassing 45 million globally since the launch of mobile in the third quarter of 2008. The company said it remains on track to double eBay’s mobile gross merchandise volume, including vehicles, to over $4 billion in 2011.
“Mobile is not huge for eBay but it is growing the company is being very aggressive here,” Mr. Beccue said.
Chantal Tode is assoc. editor on Mobile Commerce Daily
Like this article? Sign up for a free subscription to Mobile Commerce Daily's must-read newsletters. Click here!
Related content: EBay bets the house on mcommerce, PayPal, PayPal looks to merchants as it builds mobile payments offering, leave a response, or trackback from your own site.