eBay’s Auction Activity Pushed to the Side by PayPal

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Online auctions and e-commerce pioneer eBay remains one of the strongest properties on the Web, but its balance of power is changing. Only a small percentage of eBay’s third-quarter growth can be attributed to its auction site, with PayPal easily accounting for the healthiest stream of revenue.

The online payment system, which eBay acquired in 2002, has become the company’s central business focus over the past two years. And a thriving one at that, earning nearly $800 million in revenues in the just-ended third quarter of 2010 – up 23 percent since this time last year.

In comparison, eBay’s auction site was up just 3 percent compared to last year’s third quarter. The site continues to produce enormous revenues, but eBay has clearly shifted its strategy toward the continued success of PayPal’s operations.

With the mobile explosion upon us, PayPal figures to play a major role in the future development of the payments industry – which it has already greatly impacted thus far. For its part, eBay’s auction site has helped create the e-commerce industry that we know today.

But online auctions have been losing ground to marketplaces such as Amazon for several years now. Amazon, in fact, continues to widen the gap since it officially surpassed eBay’s overall traffic numbers back in 2009.

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