The company generated a price return of 32% in the last year, reflecting the confidence that investors place in eBay to register higher earnings from the strategies they are pursuing.
Earlier this year, Amazon.com, Inc. (NASDAQ:AMZN) also took further steps to expand its global presence. The company expanded its global application distribution to nearly 200 countries which include Australia, Brazil, Canada, Mexico, India, South Africa, and South Korea. Now, the registered developers who want international distribution will have their apps automatically made available for download.
Developers around the world are earning huge amounts and continue to experience strong user engagement through Amazon Appstore. The success is primarily driven by Amazon’s large customer base and industry leading e-commerce features such as one-click purchasing, Amazon.com, Inc. (NASDAQ:AMZN)’s APIs for In-App Purchasing (IAP), A/B Testing, and GameCircle. A recent survey disclosed that GameCircle-enabled mobile games earned 83 percent more average revenue per user, or ARPU, than non-GameCircle games.
Although the significance of international business expansion is growing, Wal-Mart Stores, Inc. (NYSE:WMT)’s U.S. business still makes up for more than 75% of its operating income. In late 2012, Wal-Mart Stores, Inc. (NYSE:WMT) announced its three year plan to open up 100 stores in China, out of which 30 stores will be opened in 2013. Wal-Mart also plans to spend approximately 500 million RMB to remodel 50 existing stores in order to present a better shopping experience for customers.
The company will also invest in building more distribution center networks. A new distribution center in Wuhan will enhance the network capability. Furthermore, improvements to cold storage warehouses in Shenzhen and Guangzhou will improve customer services, enhance food safety and quality and help reduce costs.
Final picture
Keeping in view the international business expansion that eBay has embarked on; in my opinion the company will be able to increase its customer traffic throughout the world – the driving factor for its sales turnover. Hence, shares of eBay should be purchased.
However, the return will take the form of price appreciation, as eBay does not have a history of paying out dividends.
With the domestic business of Wal-Mart nearing its maturity, the company increasing focus on undertaking expansion in China can be quite fruitful in the coming years. This can help boost its revenues and decrease its dependence on U.S. China is a huge economy and one of the fastest growing as well. Wal-Mart’s focus on China is likely to provide positive higher return to the investors. Also, the company expects to increase its dividend by 18% in 2013. Hence, I would recommend buying shares of Wal-Mart.
Awais Iqbal has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and eBay. The Motley Fool owns shares of Amazon.com and eBay. Awais is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article Is eBay Exploiting this Shift in Industry Dynamics? originally appeared on Fool.com is written by Awais Iqbal.
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