Mobile Devices, Apps ‘Revolutionizing’ How Consumers Shop and Pay, EBay CEO Says

"An inflection point is occurring in retail,” driven by mobile technology that’s “revolutionizing” how people shop and pay, said John Donahoe, eBay CEO, on the company’s earnings call late Wednesday. The company expects eBay and PayPal Mobile to each handle more than $10 billion in transactions this year, which Donahoe called “a stunning surge in purchases and payments on devices that did not even exist just a few short years ago.” PayPal Mobile transactions were up 150 percent in Q2 over last year, he said, noting that last quarter four major U.K. retailers added an in-store PayPal app and Starbucks added PayPal to its Android app.

Mobile transaction volume is expected to double for the year at eBay, Donahoe said, adding that eBay mobile apps have been downloaded almost 90 million times. Sellers are listing nearly 2 million items on mobile devices each week, and mobile access is attracting new customers, he said. In Q2, 600,000 new customers made their first purchase on eBay through a mobile app, he said, and customers are “buying more” because of the accessibility. “Four years ago, the only time you could access eBay is when you were in front of a laptop or … a desktop, which is maybe a couple of hours a day,” he said. A mobile device allows shoppers to access the site 24/7, he said.

Mobile is having a “profound impact” on consumer behavior, leading eBay to “aggressively” drive innovation to close transactions on mobile devices and enhance the shopping experience, he said. The company’s target motorist buyers, 30-50 year-old males, are using their mobile device “while they're under the hood,” Donahoe said. They can scan the VIN code or take a picture of the back of the auto using the mobile app, and search results “only show them parts that fit their car” enabling them to order “right there on the spot.”

PayPal is the payment method used on a “significant portion” of eBay transactions closed on mobile devices “but not all,” Donahoe said. The strongest mobile growth for PayPal is occurring outside of eBay because retailers and merchants who put PayPal Mobile Express Checkout on their app or website are seeing “significantly increased conversion,” he said. According to company data, mobile shoppers and payers are three to four times “more valuable” than those who use the Web only because “they're more engaged with our products, and they're buying more,” he said. “I can’t underestimate the importance of mobile to what we see as the future of commerce and payments,” Donahoe said.

EBay is telling prospective retailers their cart conversion will increase as much as 30 percent when they put PayPal’s Mobile Express Checkout on their mobile websites or apps, Donahoe said, because “consumers don’t want to enter in their credit card information into a mobile device.” PayPal is the “safest way to pay,” he said. Mobile Express Checkout is allowing retailers, too, to extend their reach “outside the limitations of their store,” he said. A retailer like Office Depot, which just signed up with PayPal, will be able to reach customers through mobile devices all the time in addition to that retailer’s existing in-store and online sales channels, he said. Increasingly, he said, retailers are embracing PayPal Mobile in “aggressive ways."

Streamlining consumer registration for PayPal payments on mobile devices is a key initiative, Donahoe said, citing eBay’s acquisition this week of Card.io, with technology enabling users to scan in credit card information using a smartphone camera. “You can envision a world in the not-too-distant future where you can just … take a snapshot of your driver’s license and credit cards to form a PayPal account,” he said. PayPal will increase its focus on consumer acquisition with an eye toward boosting consumer engagement and purchases, he said.

EBay Q2 profit rose to $692 million, up from $283 million in Q2 2011. Revenue was $3.4 billion, up from $2.8 billion in Q2 2011, the company said. Shares of eBay closed up $3.50 to $43.96.