In case you haven’t heard, online giants eBay and PayPal decided to part ways and become independent companies.
eBay will become eBay Marketplace, and PayPal will simply exist without eBay’s affiliation. The news comes as no surprise to many, since the ecommerce world has witnessed new, intimidating entrants such as Twitter and Facebook over the past few months.
What it means for eBay
With global expansion efforts from Alibaba, and the introduction of buy buttons from social media websites Facebook and Twitter, now would be a great time for eBay to focus on its original claim to fame.
Its growth has been fading over the past few quarters, which can be attributed to the saturation of the online market.
With PayPal as a separate entity, eBay can now direct all of its assets and attention toward working its way back to the top.
What it means for PayPal
The same can be said for PayPal. Apple introduced a new payment method last month aptly named Apple Pay.
Many commentators speculate that Apple Pay will revolutionize the way people purchase products, and predict that its effect may be so profound that wallets as we know them could become extinct.
This is nerve-racking news for a company like PayPal. So, just like eBay, now is a great time for the payments company to focus on its own business, and stay ahead of the curve that will be thrown into its roadmap by Apple.
PayPal has been largely successful because of its affiliation with eBay, and many are excited to witness its individual long term growth. With its recent success, such as the acquisition of Chicago-based Braintree, many are optimistic about PayPal’s future.
What it means for sellers and buyers on eBay
Users of eBay shouldn’t expect any immediate changes, since the split won’t be finalized until the second half of next year.
In the meantime, eBay has promised to work with PayPal to make sure payments are still a ‘seamless’ part of the eBay marketplace experience.
There’s no way of knowing what the future holds for the company, but it’s safe to assume that the user experience will remain similar to how it is now.
What it means for payment companies
The alternative payment market is expected to grow 13% in the next few years, mainly because shoppers are more comfortable making purchases that don’t include a credit card for security reasons.
Having more payment options available (like PayPal) increases your odds of having the ‘right’ payment provider for your customers.
Each additional payment method that a retailer provides can increase conversions up to 14%. Knowing that PayPal will soon be available to several other marketplaces, payment providers will have to fight tooth and nail to be used by larger retailers.
If Amazon or another ecommerce giant begins to use PayPal’s independence to their advantage, we can expect to see exponential growth in those companies.
What it means for retailers
eBay’s new focus on its marketplace will put other businesses on their toes. The company will be making bigger moves to make the user experience better on its own website, increasing competition from all businesses in the industry.
This intensity may have retailers worried about standing out from the competition.
There will be more resources for shoppers to find products, and businesses will work tirelessly to make sure their website is the ultimate destination for shoppers. This will make many online and offline retailers uneasy.
How retailers can prepare
As a retailer, you have to make sure to optimize your price and product assortment. This split will only intensify competition, and online marketplaces are going to be making big moves to ensure the ultimate customer experience for their users.
Luckily, there are solutions to these worries. Implement effective merchandising techniques to make sure your online store is laid out in a way that drives conversions. Find the right pricing strategy for your business to make sure your consumers don’t leave your website in search of a better deal.
Throw in some different payment options. You never know, you might attract a much larger customer segment. Offer a wide product assortment to make sure you aren’t missing a vital product that a customer is looking for. These tactics can make sure your customers don’t abandon your webpage for a better deal in another online marketplace.
The recent divorce of eBay and PayPal reflects the rapidly changing state of ecommerce. It is important for retailers to stay alert for separations like this, for they can induce a ripple effect that affects the entire industry.
What else can stem from the divorce of PayPal and eBay?
(Contributing Writer: Brian Smyth)