Online auction site eBay has performed better than expected for the second quarter of this year. eBay reported £442 million net income for Q2 2012. By comparison, during Q2 2011 the company made £181 million. Revenue for the company rose by 23% to $3.4bn. Due to the good results eBay shares climbed over five per cent in after-hours trading.
eBay has successfully used apps on mobile platforms to keep its revenues on the up. More and more people are shopping on their smart connected devices and the eBay app has been very popular with users. Many analysts weren’t expecting such growth due to the European macroeconomic uncertainties as cited by Intel in their results yesterday.
Alongside what it is famous for, the general public flogging unwanted stuff, there are a growing number of high profile retailers and manufacturers selling outlet style goods such as last season’s fashions or refurbished consumer goods. Examples are the House of Fraser outlet and the Canon outlet.
The business also rakes in lots of money through its online payment system PayPal, use of which is heavily pushed by the eBay site. PayPal is expanding onto mobile devices, as a payment option on other online stores and even some brick and mortar stores now offer PayPal payment options. In the last year PayPal users have grown to over 113 million, that’s 13 per cent more than a year ago.
eBay customers often face a costly combination of seller fees and PayPal fees, typically adding up to a considerable 15 per cent of the final value of the auction. That’s £75 on a £500 sale. Despite the company increasing fees and tweaking fee structures to wring more money out of users the site continues to grow in popularity. In the UK eBay bought out its only real competitor ten years ago, the then popular Yahoo Auctions. Yahoo Auctions continues to be popular in Hong Kong, Japan and Taiwan.
Looking ahead to the third quarter eBay is expecting business to be slower, as is traditional for Q3. This year the Q3 slow down will be exacerbated by the Olympics according to eBay’s CFO, Bob Swan.
