EBay expands its retail strategy with $2.4b deal for GSI

EBay’s acquisition of the digital marketing firm GSI Commerce could make it more of a threat to Inc. EBay’s acquisition of the digital marketing firm GSI Commerce could make it more of a threat to Inc. (Paul Sakuma/ File/ Associated Press)
By Rachel Metz
Associated Press / March 29, 2011

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SAN FRANCISCO — Online marketplace operator eBay said yesterday that it will pay $2.4 billion for GSI Commerce, which operates websites for retailers like Toys “R’’ Us and Bath & Body Works.

EBay Inc., which runs its namesake site where users buy and sell items through auctions and fixed-price “Buy it Now’’ formats as well as online payments service PayPal, hopes the acquisition will bolster its ability to connect buyers and sellers around the world. It could also help it become more of a threat to Inc.

GSI runs websites, packs and ships products, and offers interactive marketing services to a variety of retailers. It has long-term contracts with 180 retailers, including RadioShack and American Eagle Outfitters.

EBay has been working on improving its website by doing things such as revamping its home page, cutting upfront listing fees, and bolstering its search engine.

EBay chief executive John Donahoe said the GSI deal fits in with his company’s efforts to help retailers grow.

“Commerce is at an inflection point where the lines between online and offline commerce are blurring,’’ he said. “We see retailers of all sizes, merchants of all sizes, looking for partners that can help them grow their businesses.’’

Lots of businesses need help doing things like generating demand for products, running their websites, delivering goods to customers, and growing their mobile sales, Donahoe said. GSI does this for large companies, and eBay and PayPal do this for small and mid-size companies, he said, which makes the acquisition a natural fit.

The purchase might also help eBay compete with Seattle-based Amazon, which, in addition to selling many items directly, allows merchants to sell their products through its site.