eBay Taps Traditional Retailers to Increase Merchandise Selection

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eBay ( EBAY ) indicated in its recent earnings that a number of brands and retailers are starting to open outlet shops on eBay (stores.ebay.com).  A growing presence of traditional retailers on eBay can help increase the number of merchandise listings on the site, which in turn can attract more buyers to eBay's platform.  This is a good move for eBay which faces competition from online retailer Amazon.com ( AMZN ) and its network of third-party sellers.

Retailers opening up outlet shops on eBay

eBay's Marketplaces business constitutes around half of the $31 Trefis price estimate for eBay's stock . According to eBay management , many major retailers such as U.K.'s Saville Row, Jigsaw and Ed Hardy have opened up outlets on eBay.

Outlets on eBay can help retailers reach new customers as well as sell excess inventory quickly, reducing costs associated with accumulating inventory.  For shoppers, eBay outlet stores can provide convenience as well as potential discounts on brand name retail items.  We believe that trends such as these will help eBay increase the number of merchandise listings on its site from around 2.9 billion in 2009 to around 4.5 billion by the end of Trefis forecast period.

By modifying the forecast above, you can see how there could be an upside of more than 10% to the $31 Trefis price estimate for eBay's stock if the number of merchandise listings doubles to reach 5.8 billion by 2016, instead of 4.5 billion that we forecast.

You can see the complete $31 Trefis Price estimate for eBay's stock here .



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks , US Markets

Referenced Stocks: AMZN , EBAY

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