Technology

As Mobile Shopping Takes Off, eBay Is an Early Winner


Tim L. Fields bids for jewelry, art, and antiques on eBay (EBAY), sometimes in 30 to 40 auctions at a time. The New Orleans attorney spends hours in court and away from his PC, so he gets his shopping done using an eBay application on his iPhone that sends alerts when he's been outbid or when a sale is a bout to expire. "It's sort of an addiction," says Fields, who has used the eBay mobile app to buy a $15,000 set of antique French silver.

After losing ground to Amazon.com (AMZN) for years in online retailing, eBay has emerged as a leader in a new market: mobile commerce. As consumers increasingly shop with their BlackBerrys, iPhones, and handsets powered by Google's (GOOG) Android software, such as the Motorola (MOT) Droid, eBay has become the top mobile retailer in the U.S., say analysts. Consumers are even buying cars with their eBay apps: The most expensive example this year is a used Lamborghini Gallardo Spyder that went for $139,000. In 2010, the San Jose company expects to move $1.5 billion worth of goods through its mobile apps—more than double last year's $600 million. Tablet computers, too, are moving the merchandise: Users of eBay's app on Apple's (AAPL) iPad spend three or four times as much money in a typical session than they would on an iPhone, says Steve Yankovich, eBay's vice-president for mobile.

While mobile is still a small part of eBay's $8.7 billion in total revenue, it's a booming market. By 2015, mobile commerce will grow into a $119 billion global industry, up from $18.3 billion last year, according to analyst Mark Beccue of ABI Research.

It's also a fragmented market. About 3.3 percent of it has been claimed by eBay, with Amazon—which has $275 million in global sales volume—accounting for 1.5 percent, Beccue says. The worldwide mobile leader, which handled an estimated $800 million of merchandise in 2009, is Taobao, a unit of Chinese Web giant Alibaba Group. (Neither Amazon nor Alibaba disclose revenues from mobile.) "The companies that drove e-commerce from the early days of the Internet are now taking the lead when it comes to mobile commerce," says Michael Gartenberg, analyst of digital media at Altimeter Group.

eBay Fashion's virtual dressing room

So far, eBay has produced 14 mobile apps that let users buy, sell, and hunt for deals. Yankovich says he is aiming for a production pace of one app every five weeks. "We pick and choose what will move the needle, and then we do it fast," he says. Last year, for example, Yankovich and his team added the feature that alerts mobile shoppers as to the status of auctions. "Sales shot up," he says. "It was instant money." On June 23, eBay announced its acquisition of RedLaser, a mobile app that uses a cell phone's camera to scan bar codes.

John Donahoe, 50, eBay's chief executive officer since two years ago, says the company will roll out apps tailored to specific product categories. The first, eBay Fashion, will display popular items and deals in a slide show that users can browse through by swiping their finger on a touchscreen. The app will also offer a kind of virtual dressing room; if you find a shirt you like, for example, you can use your phone's camera to superimpose an image of the shirt on an image of you.

Such blending of real-world and virtual shopping could start a trend, says Yankee Group's Nick Holland. Amazon has an app that lets users snap a product's photo and see comparable items and prices online. (Amazon spokesman Craig Berman declined to comment.)

Yankovich says he's still discovering what works with shoppers. "Nobody knows what's going to happen in mobile," he says. "We need to be ready to spin on a dime."

The bottom line Mobile commerce is booming and still fragmented, so eBay is rapidly introducing shopping apps to stay ahead of Amazon, its main U.S. rival.

MacMillan is a reporter for Bloomberg News and Bloomberg Businessweek in San Francisco.
Galante is a reporter for Bloomberg News.

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