![]() On the other hand, the number of active users for eBay grew by just 68% in this period. Presently, the number of active users for Alibaba are almost 3.5 times its number in 2011 as seen in the above chart. The firm lost its market share not only to Amazon but to other players in the US and Europe (2012-15). Likewise, eBay’s competitors are expanding their businesses with innovative concepts. However, eBay’s marketplace business is not growing at a similar pace and is at 6%. The e-commerce market is performing exceptionally well and is expected to grow at a CAGR of 19% by 2020. Significantly, nearly 70% of the digital payments in the US are made through Apple Pay and the growth is not astonishing as Apple is a renowned and trusted brand name.īoth eBay and PayPal were facing stiff competition but this was in different segments and distinct markets, ironically one was growing at a very high rate and the other virtually saw a stagnant growth. The latter is backed by BOA, Wells Fargo, JP Morgan and few other banks and it breached 250 million customer threshold. The two largest competitors in the payment market were Apple Pay and clearXchange. Alibaba was a competitor for both the eBay and PayPal. Secondly, a new and stronger player Alibaba launched Alipay with an aim to target the US and the European market. Stripe, a start-up gave tough competition to PayPal, especially during 2014. Apple launched its payment platform named Apple Pay so that consumers can shop without their cards. The platform for internet payment companies is expanding as new players are entering the growing market segment. The company was facing challenges from other payment firms. In addition, PayPal has other business plans for diversification in the physical market. In the present scenario, it would have been difficult for PayPal to survive in association with eBay as these firms were not operating at their full potential. ![]() Interestingly, if PayPal and eBay was a successful marriage then what led to the divorce? The reason behind the merger of the two entities was survival and this also caused the spin-off. ![]() On an average PayPal contributed 25% to the total revenue right after the acquisition and 44% of total eBay revenue before the spin-off as can be seen in the below chart. The acquisition proved a success for both the companies. If only PayPal users are considered, then they also increased by 17 million (about 46,000/day). The number of active users also increased by 43% as well as the listed items on the website saw a jump, this provided more options to the customers. Subsequent to the acquisition, eBay’s revenue increased by 83% (shown in the above chart) as a trusted payment platform was provided on the website. Thereby, both these players survived the crisis and decided to work in tandem. There were several internet companies which failed in 2000-02, but large players survived, although with decreased market capitalization. Moreover, eBay decided not to compete with PayPal and focus on its main business of online retail auction, which was at that time recovering from the dotcom bubble. For this reason, two-thirds of PayPal users were derived from eBay. This was due to the fact that there were very few successful e-commerce firms back then and eBay provided access to a high number of active user base. PayPal was also hugely dependent on the user base of eBay, even though eBay had its own competing payment service. Thus, after the initial hiccups, eBay decided to merge with PayPal through its IPO in 2002. ![]() Hence, at the end of the first quarter, PayPal reported a profit and Billpoint reported a loss. ![]() Additionally, 70% of eBay users accepted PayPal as a mode of payment and only 30% opted for Billpoint. In 2000, eBay launched its own payment service Billpoint to compete with PayPal, but Billpoint was a failure in comparison to PayPal and its network. PayPal identified eBay as its user base since at that time there was no standard payment service on eBay. The firm launched its website and encouraged the staff to invite their friends and acquaintances to PayPal with an offer to pay $1 for each sign up. In 1999, PayPal was launched as a money transfer service and Confinity was merged with X.com and all other internet services were terminated. The company was founded in 1998 as ‘Confinity’, originally it was a software security firm that provided services to the handheld devices. ![]()
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