eBay equips itself to face growing competition

Although competition from social networks and entertainment sites make it challenging for eBay, the online marketplace says it is poised to retain users.

The growth of entertainment sites and social networks are increasing the competition for eBay but the online marketplace said it is ready to bring users back to it.

In a blog posted on TechCrunch recently, Keith Rabois, vice president of strategy and business development at social entertainment site, Slide, said eBay had "lost online ground and eyeballs to pure entertainment destinations such as YouTube and social networking sites like MySpace and Facebook".

Citing data from Web analytics company Compete.com, Rabois noted 11.9 percent of the time spent online by Internet users in 2006 was dedicated to MySpace, while only 3.7 percent of the time spent online was on eBay.

By December 2008, eBay enjoyed only 1.5 percent of the total minutes users spent online, wrote Rabois, citing comScore Media Metrix data. eBay was the only site in the Top 10 to see a decline in total unique visitors from December 2007 through December 2008. It was ranked the sixth while Google sites, including YouTube, topped the list, according to the blog.

While declining to comment on Rabois' blog, Allis Ghim, director of eBay, Southeast Asia, said the number of eBay's active members worldwide increased from 86.3 million in the fourth quarter of 2008, to 88 million in the first quarter of 2009.

Despite the competition and growth of entertainment sites, eBay has been seeing an increase in revenues and cash flows since 2004 through 2008. Its revenue of US$3.3 billion in 2004 had risen to US$8.5 billion in 2008, while net income rose from US$570 million to US$1.36 billion.

Although quarter-on-quarter revenue fell 6 percent in the first three months of 2009, the earnings-per-share (EPS) was slightly above expectations during the period. EPS serves as an indicator of a company's profitability.

"We are on track to strengthen our portfolio and to extend our leadership positions in e-commerce and online payments", Ghim proclaimed.

eBay plans to add several new features to its site so as to enhance the user and shopping experience, including:

  • Providing relevant inventory from trusted sellers
  • Grouping of similar items by products
  • For durable goods such as games and electronic products, inventory will be sorted by condition, and information displayed will include value and savings.

Based in Singapore, Konrad Foo is an intern with ZDNet Asia.