{{ searchResult.published_at | date:'d MMMM yyyy' }}

Loading ...
Loading ...

Enter a search term such as “mobile analytics” or browse our content using the filters above.

No_results

That’s not only a poor Scrabble score but we also couldn’t find any results matching “”.
Check your spelling or try broadening your search.

Logo_distressed

Sorry about this, there is a problem with our search at the moment.
Please try again later.

The eBay brand is synonymous with online auctions, but over the years, eBay's business has expanded well beyond those auctions.

The company's crown jewel -- PayPal -- was purchased in 2002 for $1.5bn, and the online payment provider now accounts for more than a third of eBay's revenue. eBay's portfolio also includes comparison shopping site Shopping.com, financing service BillMeLater and rental classifieds site Rent.com.

This week, eBay made what it hopes will be one of the most significant additions to its portfolio when it announced it is purchasing GSI Commerce for $2.4bn. The deal, which is being financed with cash and debt, is designed to help eBay achieve its goal of becoming "the leading strategic global commerce partner of choice for retailers and brands of all sizes."

GSI provides a suite of ecommerce solutions, including a web store platform, order fulfillment, and marketing services. John Donahoe, eBay's President and CEO, leaves no doubt as to the reason GSI was purchased: this is "the most comprehensive integrated suite of online commerce and interactive marketing services available," and "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."

Currently, a good chunk of GSI's client base consists of major retailers and retail brands, including Adidas, DKNY, Ralph Lauren, HP and QVC. It also operates a sports merchandising business and several retail-oriented websites, including Rue La La, which it purchased for up to $350m in 2009. eBay will be selling the merchandising business and the majority of its interest in GSI's owned sites to a company formed by CSI's CEO Michael Rubin, who founded GSI in 1995 at the age of 22.

eBay sees the GSI acquisition producing $60m in synergies by the end of 2013, but it's paying a hefty premium -- more than 50% to GSI's stock price on March 25. This, of course, raises the question: despite the fact that eBay's acquisition makes more sense than, say, its acquisition of Skype, is eBay paying too much?

It's a difficult question to answer. A lot will depend on how much GSI changes under eBay's rule, and how GSI's customers perceive the arrangement. As we've seen with the Amazon Marketplace, for instance, tensions can develop when a service provider is also a major retailer. Whether similar tensions emerge here remains to be seen.

What is clear: despite the frothy valuations being lavished on startups in the social networking and media spaces, ecommerce is riding the wave of a resurgent tech industry too, and given the maturity of this market, it would be surprising if this was the last big deal of the year.

Patricio Robles

Published 28 March, 2011 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

2377 more posts from this author

Comments (0)

Comment
No-profile-pic
Save or Cancel
Daily_pulse_signup_wide

Enjoying this article?

Get more just like this, delivered to your inbox.

Keep up to date with the latest analysis, inspiration and learning from the Econsultancy blog with our free Daily Pulse newsletter. Each weekday, you ll receive a hand-picked digest of the latest and greatest articles, as well as snippets of new market data, best practice guides and trends research.