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eBay Ties-Up with Noon, Enters the Middle East Retail Market


eBay Inc. EBAY has joined forces with Noon, an e-commerce venture to sell products online via noon.com. Notably, Dubai billionaire, Mohammed Alabbar, is the founder of the e-commerce venture.

The latest move will aid eBay in expanding its business in the e-commerce market of Middle East. This is in sync with the company’s aim of global expansion.

This partnership will benefit the customers of Saudi Arabia and UAE as they will have access to products available outside their native countries, consequently, enriching the shopping experience. In fact, eBay will make products from the United States and other countries available on noon.com and its shopping app.

We believe the availability of a wide variety of products will attract customers to the platform and drive the sales of eBay. Further, the possibility of seizing the market share rises with the increase in the number of products available.

Coming to the price performance, shares of eBay have returned 17.2% over a year, underperforming the industry’s rally of 50.2%.

Middle East Market Holds Promise

The e-commerce market in Middle East is growing at a rapid speed and is expected to expand further in future due to the increasing use of internet and smartphone. Furthermore, improving infrastructure remains a key factor for growth of this particular market.

With the rapidly growing online retail markets in gulf countries like UAE and Saudi Arabia, the Middle East region holds great potential for growth of the e-commerce companies.

Per the latest data from Research and Markets, the online retail sales in the gulf countries are expected to double by 2020. Moreover, the UAE market is anticipated to grow at an annual rate exceeding 20% till 2021.

According to reports from Statista, revenues in Saudi Arabian e-commerce market are anticipated to grow at a CAGR of 11.3% between 2018 and 2022, and reach $9.4 billion by 2022. Additionally, the revenues in the same market for 2018 are projected at $6.1 billion.

We believe eBay is well poised to reap benefits from this rapidly growing market with its strong retail strategies.

eBay Inc. Revenue (TTM)

eBay Inc. Revenue (TTM) | eBay Inc. Quote

Strengthening Competition

The company’s strong focus toward global expansion and strategic partnerships will continue to benefit its market position.

The latest move is likely to provide the company an edge against Amazon AMZN and Alibaba BABA.

Last year, Amazon acquired Souq.com, an online retail company to reap benefits from this rapidly growing market. Speculations are rife that Alibaba (BABA) has also been trying to make acquisitions in the Middle East region. The company’s Aliespress.com is already operating in this region.

Consequently, eBay is likely to sustain momentum in this competitive market by partnering with Noon.

Zacks Rank & Stock to Consider

Currently, eBay carries a Zacks Rank #3 (Hold).

A better-ranked stock that can be considered in the retail-wholesale sector is Expedia EXPE which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long term earnings growth rate for Expedia is currently pegged at 14.52%.

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