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Speculation Surrounds eBay-GSI Commerce Acquisition

With the $2.4 billion eBay acquisition of GSI Commerce just announced, it’s impossible to know how the melding of the two companies will affect the two companies in the long run, never mind the retail industry as a whole. But retail and business analysts are poised to speculate.

Generally, analysts are focused on the acquisition as an attempt by eBay to offer more services similar to Amazon. In fact, the acquisition does just that. GSI will provide eBay the ability to create and maintain third-party e-commerce web sites; and handle orders, shipments and returns for third-party sellers through distribution centers ― both functions now performed by Amazon.com. Prior to the acquisition, eBay already was a marketplace for third-party merchants and through Paypal has been able to accept online payments.

Additionally, the GSI acquisition provides eBay the ability to offer marketing services for retailers and supply eBay classified ads as well as Craigslist ads — two services not currently offered by Amazon.com.

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“I think eBay is going to have to work really hard to out-Amazon Amazon (which clearly seems to be what this is about),” noted Paula Rosenblum, analyst for Retail Systems Research (RSR). “It has some interesting aspects – the cradle-to-grave management of products, an opportunity to stamp out the gray market once and for all,  an easy on-ramp to mobile for GSI clients….but it’s still going to be tricky.  The customer base of eBay is just really different.” Rosenblum offered further thoughts in the March 29, 2011 RSR newsletter.

“eBay is lagging Amazon in becoming a platform for third-party sellers because Amazon has a bigger distribution network, which lowers costs,” said Jason Helfstein, an analyst at New York-based Oppenheimer & Co., in a recent Wall Street Journal article. “This deal positions eBay with additional distribution centers and GSI’s customer list.”

In a press statement, John Donahoe, eBay President and CEO commented on the acquisition: “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.”

Part of the acquisition transaction will include eBay selling GSI’s licensed sports merchandise business and 70% of ShopRunner and Rue La La. These assets are set to be sold to a newly formed holding company which reportedly will be led by GSI founder and CEO Michael Rubin.

The bottom line for the acquisition? According to RSR’s Rosenblum: “Short-term we think it’s a good deal for GSI’s customer base and certainly a boon for eBay’s marketplace. Longer-term, we believe it’s in retailers’ best interest to control their own destinies.”

  
For more on GSI Commerce, click here to access an exclusive Retail TouchPoints TV interview with Fiona Dias, GSI Commerce Executive VP of Marketing and Strategy.

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