eBay to Acquire GSI Commerce

Takes on Amazon with biggest purchase since Skype.

by Auctiva.com staff writer
- Mar 28, 2011

eBay will acquire e-commerce and interactive marketing service provider GSI Commerce for a reported $2.4 billion in what is being called the company's biggest acquisition since Skype.

The deal, which was announced today, is subject to regulatory and shareholder approval but expected to be completed sometime during this year's third quarter. Once approved, the deal will be eBay's second largest acquisition ever, and its biggest since 2005, when it bought Skype for $2.6 billion.

The acquisition will make eBay more competitive with Amazon by allowing it to cross-sell GSI services to eBay sellers, reports Jordan Rohan, an analyst with Stifel Nicolaus.

"They are paying a reasonable price to be more competitive with Amazon," Rohan says.

eBay President and CEO John Donahoe adds that the acquisition will also benefit GSI's 180 customers, which include AutoZone, Borders and Toys "R" Us, by allowing them to leverage eBay's marketplaces and PayPal services for their items.

GSI will enhance our position as the leading strategic global commerce partner of choice for retailers and brands of all sizes

"We intend to lead the next generation of commerce innovation," Donahoe says. "The acquisition of GSI, which offers the most comprehensive integrated suite of online commerce and interactive marketing services available, will significantly strengthen our ability to connect buyers and sellers worldwide. Combined with eBay Marketplaces and PayPal, we believe GSI will enhance our position as the leading strategic global commerce partner of choice for retailers and brands of all sizes."

GSI manages sites for major retailers like Toys "R" Us and Aeropostale, and also manages those sites' marketing campaigns.

It also owns shopping site Rue La La, which is only accessible by invitation, and ShopRunner.com, a site that allows members to get two-day free shipping from participating retailers. However, eBay says it will do away with about 70 percent of Rue La La and Shopperrun.com, and all of GSI's licensed merchandise business, because they are "not at core to its long-term growth strategy." These companies will be sold to a newly formed company run by GSI founder and CO Michael Rubin, officials note.

"Technology is changing how consumers shop, and retailers and brands are changing how they compete," Donahoe continues. "With its complementary strengths, GSI will extend the power of our portfolio. With eBay, PayPal, GSI and our global platform capabilities, we are focused on delivering new ways for retailers and brands of all sizes—from sole proprietors to large merchants—to drive innovation, engage customers and help people shop anytime, anywhere and on any device."

Last year, GSI had a revenue increase of 36 percent, though it has an operating loss of $17.3 million, according to news reports. eBay predicts its addition will generate $60 million in "synergies" by 2013.

About the Author

Auctiva staff writers constantly monitor trends and best practices of those selling on eBay and elsewhere online. They attend relevant training seminars and trade shows and regularly discuss the market with PowerSellers and other market experts.

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