Internet auction giant eBay has purchased eCommerce management and marketing firm GSI Commerce for a massive $US2.4 billion, with the company attempting to attract more established retailers in the hope of challenging rival Amazon.
The business will be acquired at $US29.25 per share, representing a 51% premium over GSI’s closing price on March 25, and a 47% premium over the average closing price in the 30 days prior to March 28.
eBay chief executive John Donahoe said in a statement the move will allow eBay to “lead the next generation of commerce innovation”.
“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.”
GSI Commerce was founded by Michael Rubin in 1995, and now turns over more than $US1 billion ever year. The company was featured in an episode of the American television series Undercover Boss in early 2010.
Reports suggest Rubin maintains a 6.5% stake in the business.
eBay will sell some of GSI’s licensed brands focused on sports merchandise, along with 70% of the ShopRunner and Rue La La brands. Those two companies will come under a new holding company led by Rubin.
GSI runs the online stores for dozens of large retailers, including American Eagle, Radio Shack, Ace Hardware, Zales and Timberland. As eBay attempts to promote itself as more of a retail destination, rather than just an auction house, the acquisition of such a company will help companies create more traditional retail shipping and handling experiences.
But there’s another aspect to the acquisition analysts have pointed out – GSI may be able to help eBay catch up to Amazon in the shipping department.
Currently, eBay shipping is confusing and can be done a number of different ways. If eBay integrates the GSI shipping experience, it could make it simpler for users searching through retailers’ eBay pages and may help it compete with Amazon.
Donahue even mentioned this in the official statement, saying that eBay is focused on delivering solutions 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.”
However, one of the elements GSI has that could help improve shipping – the ShopRunner brand – is being partially divested. ShopRunner allows users to access two-day shipping for a flat annual fee.
The announcement also comes alongside a local push by eBay Australia to increase the number of individual merchants and brands using the platform .Two years ago, local chief executive Deborah Sharkey announced a move to increase ease of use for fixed pricing.
Just last month, eBay announced its most successful merchants in Australia had recorded turnover growth of 38%, with the most successful retailer selling $12 million worth of goods.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
