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eBay's Foray into Mobile
Mobile commerce is gaining traction. Consumers increasingly rely on their iPhones, iPads, BlackBerrys, and handsets to make online purchases. Mobile appears poised to make a large impact on e-commerce this holiday season. According to Experian Marketing Services’ 2010 Holiday Marketer report, the percentage of consumers making purchases from mobile phones has increased from 10% in 2009 to 13% in the current year. The mobile space will likely have greater influence over where and how customers shop for gifts. Social platforms will probably also have an important influence on the upcoming holiday season, as consumers use such mediums to find product information and reviews. Marketers will likely make a push into this space in the coming months, in preparation for the season.
Looking further out, mobile shopping will probably expand significantly in the coming years. At present, Taobao, a subsidiary of China-based Alibaba Group, is the worldwide leader in mobile commerce, but the market remains fragmented. eBay (EBAY) has emerged as the largest domestic retailer in this new market, though it still has only claimed about 3.3 percent. And, Amazon.com’s (AMZN) mobile-market footprint is roughly 1.5 percent. These companies, along with producers of mobile devices, such as Apple (AAPL), Motorola (MOT), and Research in Motion (RIMM) should benefit from growth in mobile commerce.
eBay’s mobile-commerce applications (apps) may well change the face of e-commerce. By the end of June, the company had published 14 apps that allowed users to buy, sell, and comparison shop online using their mobile devices. The company’s recent acquisition of RedLaser allows it to offer a mobile app that makes use of a cell phone’s camera to scan bar codes. eBay is looking to introduce one new application roughly every five weeks, with apps tailored to specific product categories. An example is eBay Fashion, which will display popular offerings in a slideshow that users can browse through. It will also provide a virtual dressing room, in which potential customers can use their phone’s camera to superimpose an image of an article of clothing on a picture of themselves. The use of camera phones is not unique to eBay applications. Amazon has an app that allows users to take a picture of an article of clothing, and then see comparable offerings and prices online.
Meanwhile, eBay’s online payments business, PayPal, is driving growth and innovation in mobile payments. Over 2.5 million people downloaded PayPal’s mobile apps in the first six months of the year, and this unit generated considerable improvement in mobile payment volume. The payments business has been expanding its reach in Asia, with significant mobile deals in Singapore and Malaysia.
Mobile commerce clearly has a bright future ahead of it. eBay appears to be off to a good start, although it may well face stiff competition from Amazon and other rivals. At this juncture, it remains unknown how the field will develop in the coming years. This uncertainty has important implications for companies, potential investors, and consumers. Companies are still just discovering what works with customers. Those with bright ideas that can offer consumers something new and valuable will probably benefit the most. The ability of companies to adapt to changing realities in mobile commerce will likely also prove important. Developments in this space bear close watching by investors interested in companies with mobile offerings.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.