The new and existing e-commerce businesses have threatened EBay off its market share
EBay Inc. is in a proper competitive market at the moment. It is facing intense competitions from all sides. At one time, Amazon wants to over take the company in the online retail business and then it launches an online auction webpage as well to take on EBay. On the other hand, various startups are launching that is just trying to replace the e-commerce website and the recent launch of Sell It Easy has taken all the hype. It is estimated that the new start up, Sell It Easy, will give a better alternative option to the online buyers and sellers.
Hence, eBay is facing competition from all, the established and the new, business recently in the industry which has further threatened the company to lose its market share. Alibaba and Amazon seem to be the biggest threats to the company as well as the online retailing giants such as Wal-Mart.
The tough competition can be noted from the way EBay is doing its business. Its average spending per active user is also declined significantly. In 2013, it used to around $636 which is now $515 in 2015. But the company has seen a slight user growth and this will be a continuous trend as the company will not become obsolete at any point. However, the market price of the company is nearly 20 percent less than the estimated price and the reason behind this is the declination of enthusiastic users and user growth.
As Forbes reports, “The number of active users is a key driver for this segment. Using Trefis interactive technology, if we assume the number of active users on eBay to remain flat at current levels (around 167 million), over the forecast period, our valuation would be close to the current market price.”
According to sources, the company will see a major downfall in its EBITDA margin for transaction revenues as well. The value will be nearly 46.7 percent this year after decreasing from 51.8 percent from last year. If the same conditions are carried forward by the company, it will turn out to be really bad as the business is just declining as the user growth is negligible.
This is the reason why companies like Amazon and Alibaba have now surpassed the online auction web page. These both online retailers add magnificent numbers to its user data base daily. EBay will have to come up with new strategies to revive its business in the long run.
Ebay stock was up 2.15% to $24.51 at market close on Thursday.
No comments:
Post a Comment