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Our Big Bet on Mobile Is Paying Off: eBay CEO

David Paul Morris | Bloomberg | Getty Images

After making a big bet on mobile several years ago, eBay CEO John Donahoe told CNBC's "Squawk on the Street" that the gamble is paying off with the company able to monetize the same on mobile as it does on the Web.

"Consumers are making the mobile device the central navigation system of their lives," the eBay executive said. "While it's driving great mobile results for us, the coming year will be when the mobile device links the digital world to the physical world."

Donahoe pointed to a new Black Friday mobile app it has developed with Macy's that will allow consumers to find deals in their Macy's store ahead of time. That will then get consumers to come into the actual stores to shop. (Read More: Holiday Spending Outlook Gets Merrier...Even With Sandy)

As this distinction between offline and online blurs, Donahoe expects an explosion of innovation around how that can help retailers.

"Retailers are telling us not just to provide payments, but to be a platform that allows them to drive volume and incremental traffic in their stores," he said.

In addition to creating greater synergies between the eBay and PayPal businesses, this trend is also expanding eBay's opportunities beyond the $500 billion e-commerce market to the $10 trillion retail market, Donahoe said.

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"On half of retail transactions, consumers access the Web at some point in their shopping experiences," he said. "Increasingly this is being done on a mobile device."

E-commerce in Europe is also a bright spot, Donahoe said. "E-commerce growth rates continue to be in the double digits," he said, noting that growth in Spain and Italy is at about 20 percent.

He added: "As European consumers look to stretch their euro, they're coming online to get lower prices."

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