PayPal’s Independence Leaves a Questionable Future for eBay
For the longest time, eBay and PayPal have acted as a unit, with each one helping the other succeed and grow. However, eBay has now decided to allow PayPal to be its own, independent company, which has created a questionable future for the online auction giant.
The concern with this spin-off is the amount of growth PayPal is experiencing in comparison to eBay. PayPal managed to bring in $6.6 billion in revenue last year, and it maintains a much faster growth rate than eBay’s core Marketplaces. In the near future, PayPal could overtake eBay in revenue.
Much of PayPal’s growth was fueled by eBay’s efforts to expand the financial provider beyond basic online transactions. For instance, retail stores can now use PayPal Here to process credit card payments on mobile devices. PayPal has branched out into business lending by offering select users a chance to obtain a loan based on their credit card transaction history, and this has created a surge of new interest in the company’s services.
PayPal provides eBay with valuable data on its 152.5 million users, including information about how people spend money while not on eBay. This information helps eBay structure the pricing and inventory on its core site. eBay is now facing extra competition from Amazon, Alibaba and Google, which could significantly reduce the site’s audience in the future.
What will come of eBay after the split? Only time will tell. From an outsider’s perspective, it looks like eBay should have reconsidered their decision.