EBay open to acquisitions in Russia, says CEO

By : |February 18, 2010 0

MOSCOW, RUSSIA: EBay would consider acquisitions in the $5 billion Russian online retail market to help maintain a foothold in the country, chief executive John Donahoe said on Wednesday.

"If the right opportunity presents itself, we will be open to acquisitions (in Russia)," Donahoe told Reuters during a reception held by the U.S. embassy in the Russian capital. He added that joint ventures were also under consideration.

EBay, an e-commerce giant that connects buyers and sellers, said on Tuesday it would start an online platform in five European countries and Russia by the end of March to facilitate cross-border transactions.

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Consumers in those geographical areas will be able to access eBay’s marketplace sites in their home languages and pay for fixed-price items using PayPal, eBay’s online payments system.

Donahoe said Russia’s e-commerce market is worth $5 billion a year – compared with $150 billion in the United States – but could grow to $20 billion.

"Our goal … is to have a small percentage of that … The (Russian) market is at an exciting, but growing stage, and there is a lot of opportunity there," he said.

"The Russian e-commerce market grew by more than 50 percent last year to $5 billion and can continue to do so for many years to come," he added.

Russian Internet use is still relatively low, but growth in broadband connections has attracted more users.

EBay is focusing on cross-border transactions because they tend to provide higher revenue and gross margins than similar transactions within a single country or market.

Similarly, using PayPal for cross-border transactions generally reaps higher transaction fees for the company.

"Cross-border trade has become an increasingly important source of both revenue and profits for us," said eBay in its annual report, filed on Wednesday.

EBay competes against online retailers such as Amazon.com, and has been expanding into new markets across the globe.

Donahoe reiterated a cautious view of the global online retail market, saying the economy was growing at a slow and steady rate.

He said he was content with eBay’s 30 percent stake in online telephone network Skype.

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