eBay's (EBAY) "eBay Now" service allows customers to order from local retail chain stores through its website eBay.com, and the product is delivered within an hour. Currently, this services is available in Chicago, New York, Dallas, and the San Francisco Peninsula region. eBay plans to expand this service to 25 other regions by the end of 2014. Shutl, which eBay acquired recently, will support its product delivery. Shutl has the expertise to deliver the products with its strong distribution network, which is leading towards quick delivery of products. Additionally, eBay is offering free shipping through Christmas evening, for which customer usually pay $5 for the delivery to their doorsteps. Free shipping will attract more customers to its website. This strategic expansion and free shipping will boost its revenue from the marketplace segment, which, is already witnessing a robust revenue growth rate, wherein its revenue grew 12% year over year in the third quarter.
Amazon.com (AMZN), is also adopting various strategies to engage more customers on its website. Currently, Amazon is working on a program known as "Amazon Prime Air," which will deliver products that weigh up to 5 pounds with the help of drones. The company aims to make drone-based deliveries after 2015, delivering products to customers within 30 minutes of their order. The drones will carry the product within a 10 miles radius from the Amazon distribution center, which will limit the availability of this service. Currently, drone based delivery is a company vision and is in the development phase. The execution of this technology is expected by the end of 2015. Hence, in the short run eBay doesn't face any competition from the Amazon Prime Air service.
PayPal - Main mobile software
The payment system is undergoing a transition from cash and credit cards to mobile payments. Globally, mobile payments are expected to climb 44% to $235 billion this year and are expected to reach $721 billion by the end of 2017. To capitalize on this trend, eBay aims to make its payment system, PayPal, the main platform for mobile transactions. For this, eBay has been adopting various strategies to prompt customers to pay from mobile using the PayPal system. The company launched a device known as beacon and acquired Braintree, which is expected to act as a tailwind for the company's payment system going forward. I think all efforts to encourage more customers towards mobile payment will fulfill its 2013 guidance of generating $20 billion in mobile commerce volume.
Looking at the mobile payment future growth potential, Apple (AAPL) has also developed a technology known as iBeacon, which is available in its software update iOS 7. This new feature will allow Apple users to make payments through their smartphones. Both iBeacon and beacon use bluetooth technology to transfer the payment, but I feel eBay's Beacon device has a competitive advantage over Apple iBeacon on the grounds of user base. PayPal Beacon is available on Apple iOS software as well as for Android users, whereas Apple iBeacon caters to the needs of Apple users only.
Various strategies adopted by eBay to enhance its Marketplace and PayPal segment are expected to contribute towards its long term revenue guidance. The company aims to generate revenue in the range of $21.5 billion to $23.5 billion for the year 2015. In the trailing twelve months, its revenue has grown 14.90% to $15.51 billion. I believe the company's fundamentals are on track to achieve its long term revenue target.