eBay Gets Back to ecommerce Roots to Keep Up With Itself


And so the transition continues. The company that pioneered online auctions now clearly seems to be repositioning itself as an ecommerce platform powerhouse with another large investment, this time by purchasing GSI Commerce for a reported $2.4 billion.

For as long as I can remember there have been rumblings within the eBay seller community about increased fees, changing guidelines, and the general perception that they were being pushed out in order to clear space for large retailers. It’s no secret that eBay has been schmoozing big retailers for some time now, but the acquisition of GSI will provide immediate access to hundreds of large, established and identifiable brands. For eBay sellers large or small, this may either be a massive opportunity to cross sell, or it could serve as the final insult.

Let’s be honest though, this is the kind of move that eBay had to make for the sake of longevity, and it’s another telling sign that the company is willing to risk patronizing its existing seller base to reinvent its core ecommerce business. There’s no doubt this also means taking on new challenges in an effort to mitigate others, and a whole new set of back end upgrades will be required to support fulfillment as eBay continues to veer away from auctions and more toward an excess inventory, online retailer approach.

There’s no doubt that eBay’s revenue has lagged significantly over the past few years, and the commerce end of the business clearly has some work to do if it hopes to ever match the growth of their payments division. In fact, PayPal has projected that their revenue will double by 2013, bringing it in the neighborhood of $6 to $7 billion.

With the success that Paypal has accomplished since its slow start back in 1998, the acquisition of GSI has an ability to provide the outreach of a massive enterprise ecommerce platform that will no doubt expand the already broad reach of the eBay payment system.

Since the novelty of auction sites started to wane, PayPal is where the growth has been for eBay (over the next few years it could account for nearly half of eBay’s revenue), and although that’s good news for the company, I can’t imagine that’s the direction they envisioned the business heading. But with the 49% stake eBay now owns in open source ecommerce platform creator Magento, and with the outright purchase of GSI, it seems that CEO John Donahoe has no intention of loosing focus on sparking sales growth and finding a way to take an early lead in the mobile market. It’ll be interesting to see how the new eBay unfolds.

On a slightly different note, it’s been a week since eBay announced it was buying GSI, but it only took six days for a lawsuit to emerge. God Bless America.

In case you don’t follow the ticker:

•eBay’s all time high stock price was just over $58 in December 2004

•Historical low was just above $10 in March 2009

•The closing price yesterday, March 31, 2011, was $31.04


Jared Matkin is a staff writer for HotWax Media with a background in PR, Branding and Marketing. He’s also a light-hearted and an opinionated character who will join other HotWax Media employees and advisers in periodically posting his thoughts on topics ranging from enterprise eCommerce to business and technology.

DATE: Apr 02, 2011
AUTHOR: HotWax Systems
Enterprise eCommerce, eCommerce, Enterprise eCommerce Platform, Jared Matkin