EBay’s Enterprise segment, which runs e-commerce business for four of the continent's largest sporting goods retailers and six pro sports leagues, generated gross merchandise sales (GMV) of $940 million in the second quarter ended June 30, 2014, up 15 percent from the same quarter in 2013. The growth was driven by the opening of new stores and same store sales growth of 14 percent.
The segment earned $267 in fees from those sales, up 3 percent from a year earlier. That included $207 million in transaction fees and $60 million from marketing services provided to the segments customers. Segment operating incomes grew 50 percent to $3 million, or 1.4 percent of revenues, up 10 basis points from a year earlier.
EBay Enterprise clients include Dick’s Sporting Goods, Eastern Mountain Sports, SportChek and Sports Authority and it also runs online stores for Quiksilver, Timberland, Speedo, Sunglass Hut, ESPN, Major League Baseball, NASCAR, the NBA, the NFL and the NHL. In addition to operating e-commerce sites, the segment operates call centers, fulfillment centers and provides digital marketing services. Total cost of net revenues increased 100 basis points to 78.3 percent. The segment generated just 4.7 percent of EBay’s revenue in the quarter, with the balance coming from its Marketplace and Payment segments.
EBay reported the volume of mobile traffic to all its platforms 68 percent during the quarter, including 260 million downloads of its apps. PayPal now handles more transactions from EBay’s mobile site than its desktop site. Nearly one in six of EBay’s customers, or 59 percent, shopped across multiple screens in the quarter.
CEO John Donahoe said more than 80 retailers are now selling on EBay, including about a third of the company’s Enterprise customers. PayPal, meanwhile, is testing free returns on cross-border purchases in four European markets in a bid to accelerate its international growth.
EBay lowered the upper end of its full year guidance by $200 million from $18.5 billion to $18.3 billion, which still represents growth o 12 to 14 percent. The change reflects the impact of a changes to Panda – Google’s organic search algorithm – and a May cyber attack that caused the company to request all customers reset their passwords during the quarter. While buyers representing 85 percent of the volume affected by the breach have reset their passwords, the incident slowed growth at EBay’s Marketplace segment. EBay affirmed its EPS guidance, saying a share buyback and PayPal’s strong performance would offset the effects of the two incidents.
