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All Eyes Should Be On eBay

Posted on 12.19.2010

Ebay all but introduced the world to online shopping, and it continues to shape the e-commerce industry throughout its own history of major acquisitions. The company made another significant purchase on Monday, agreeing to buy European daily deals site brands4friends for $200 million.

It is the largest of three significant acquisitions by eBay in the month of December, and the fourth in the last half of 2010. All of the moves are intended to strengthen eBay’s position in the areas of online social shopping and mobile commerce – two of the most important developments taking place on the Web right now.

That sends two very clear messages to today’s e-commerce professionals. The first is that daily deals/group buying and the mobile shopping space are more than just trends, and the second is that – despite what anyone may say – eBay is as relevant today to the world of online commerce as it has ever been.

Below is a closer look at eBay’s most recent acquisitions, and how they may affect e-commerce in the decade ahead:

The German Groupon?
Based in Berlin, brands4friends is an online social shopping club that sells clothing, shoes and accessories throughout Europe. Launched in 2007, the site has about 3.5 million subscribers to whom it offers daily deals using a group-buying/coupon model similar to that of Groupon. About 20 percent of all European online fashion sales are attributed to increasingly popular daily deals sites, and brands4friends is the largest and most profitable. The site carries about 600 brands including Calvin Klein, Buffalo and Diesel, and the deal should considerably strengthen eBay’s European presence while adding to its $4.5 billion in annual sales from fashion and accessories. The purchase also includes the Japanese version of the brand4friends site and a separately owned British-based shopping club called Aside from significantly improving eBay’s global reach and its position in the online retail fashion industry, the move signifies a dramatic entry into the daily deals space that already this month has seen Groupon’s rejection of a $6 billion offer from Google and Amazon’s $175 million investment into Groupon competitor LivingSocial.

Going Mobile
Less than a week before announcing the brands4friends acquisition, eBay purchased the Portland, Oregon-based mobile app developer Critical Path Software. Terms of the deal were not disclosed, but the move was further indication of eBay’s increasing efforts to expand its mobile offerings. Critical Path had previously worked with eBay’s mobile development group to create an iPhone app, eBay classifieds, a ticket-buying app through StubHub, and the comparison shopping app Two days before the announcement, eBay reported that its 2010 holiday mobile sales were up 165 percent to a record $13 million, and that it expected the annual mobile sales through its marketplace to surpass $1.5 billion this year. Expect a full array of new apps throughout the coming year as mobile may prove to be the ideal way for eBay’s marketplace to compete with Amazon and reclaim its position of prominence.

Where Online Meets Offline
The holiday shopping season had barely begun when eBay put up $75 million to purchase local shopping startup Milo on December 2. Milo provides a service to both buyers and sellers much in the same way eBay’s traditional auctions do, except that the mission behind Milo is to unite online shopping with offline shopping. The site lists in-store product inventory and pricing in real-time for more than 140 retail outlets with over 52,000 brick-and-mortar locations across the U.S. More than half the retail partners are small- and medium-sized businesses, giving local merchants a vehicle to compete with larger retailers and allowing eBay sellers with physical stores to sell their products locally. The purchase was a no-brainer for eBay, according to the announcement, which called the move “a natural extension of what we’ve been doing for 15 years – bringing buyers and sellers together to access the largest selection available anywhere.” Like the previously mentioned acquisitions, the Milo deal will add momentum to the development of mobile and social commerce while also injecting new life into eBay’s auction business. Also very important to note, the online research to offline buying market is currently at $917 million, and Forrester projects it to reach $1.3 trillion and account for 50 percent of all retail sales by 2013.

More Mobile
The so-called eBay shopping spree began back in June when the company purchased a mobile barcode-scanning application for the iPhone. Called RedLaser, the app from startup company Occipital scans bar codes for in-store price comparisons and other product search purposes. Terms of the deal were not disclosed, but eBay wasted little time in adding the local shopping results provided by the Milo acquisition to the new app in early December. Now shoppers all over the U.S. using RedLaser can find out which local retailers have a particular item in stock and which locations offer the best prices – through a single scan with their mobile phones. Also recently, eBay has just launched RedLaser for Android devices. Once again, the RedLaser acquisition, in combination with Milo and Critical Path, bolsters eBay’s growing mobile presence as well as its commitment to social shopping and local commerce.

For years eBay has served as a guide to the rest of the e-commerce industry, as much for its business decisions as for helping to introduce an entirely new way of doing business online. That certainly seems to be the case now, as evidenced not only by the moves of the last six months but especially those of the last three weeks. Given the company’s track record and resources, e-commerce professionals would be well advised to keep a close eye on eBay in the new year.

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