Contact Us          Submit a News Story          News Archives          Home

E-Commerce News

More on eBay's planned acquisition of

July 13, 2005

UPDATE: eBay's planned acquisition of, a comparison shopping search engine, is, in theory, a good move. However, its success could well depend on how effectively and to what extent the two companies are integrated together, an issue eBay isn't addressing in much detail, at least not just yet.

Although each organization could gain by integrating services from the other, so far eBay is only committing to one area of integration: Once the deal is finalized, some eBay listings will begin appearing on

This, according to eBay, will be good for its merchants because it will give them access to a new sales channel, and it will be good for users because the variety and number of products in the comparison shopping index will grow with eBay listings.

However, even on this point, eBay is keeping mum on which type of eBay listings will get featured on and what will be the terms for eBay merchants that want to do this.

.... Advertisement ....
Laplink Controller

"The vision we have is to give our sellers who are evolving in that direction access to that new channel for selling and for possibly including eBay listings within the product selection already available on How we're going to do that... we haven't announced," said Hani Durzy, an eBay spokesman, in an interview. "Nothing like that has been decided."

More details can be expected to emerge after the acquisition closes, which is expected to happen at some point in the third quarter, subject to the approval of regulators and shareholders, Durzy said.

For example, eBay isn't saying anything about how its PayPal online payment service might fit into the integration. "We haven't discussed PayPal as part of this at all," Durzy said. With 70 million PayPal accounts, it's safe to imagine that PayPal is already being used by merchants and buyers, he said.

Without speculating on how or even if PayPal will be part of the integration, Durzy added: "We expect that the natural benefits PayPal brings to both buyers and sellers on and off eBay will continue and grow as the two platforms work together."

No word either on whether comparison shopping capabilities from will be offered at eBay, Durzy said.

Another open question is's Epinions unit, which has 2 million product reviews generated by about a community of about 400,000 users. It would be logical to assume that those evaluations will become available on eBay as well, but the San Jose, California-based eBay is noncommittal about that also, at this point.

"We have not detailed any plans to integrate Epinions into eBay listings," Durzy said in a subsequent e-mail message, adding that there are parallels between the way in which users generate Epinions reviews and the way eBay users post evaluations of buyers and sellers., based in Brisbane, California, didn't return calls seeking comment.

The deal with and its potential benefits comes a bit late to some proactive eBay merchants who have already listed their products on the comparison shopping search engine. That is the case with Gotham City Online, a shoes and accessories seller on eBay.

"It's not going to give us anything new, but the deal is probably pretty good for eBay," said Jonathan Garriss, who is Gotham City's chief executive officer as well as the executive director of the Professional eBay Sellers Alliance (PESA). PESA is a group of about 600 large eBay sellers that collectively generate more than 70 million eBay transactions and US$1 billion in eBay gross merchandise volume annually.

Still, the acquisition, which was announced Wednesday, opens the door for eBay to make it easier for more of its merchants to list their products on, said Patti Freeman Evans, a Jupiter Research analyst. "This provides an opportunity to many more sellers who would either not understand that's an option or not be able to put it together themselves," she said.

The combination of eBay and is certainly significant in the e-commerce space. In April, eBay was the fifth most visited site by U.S. users overall, and the most visited among online retailers, with 63.8 million unique visitors, according to comScore Networks Inc. Meanwhile, was the 20th most visited site overall and the most visited comparison shopping site, with 22.6 million unique visitors in April, according to comScore.

"'s consumer-friendly comparison shopping functions are compelling additions to eBay's portfolio," said James Lamberti, vice president of comScore Networks, in a commentary e-mailed to reporters. "This acquisition brings together two of the largest properties in an increasingly competitive e-commerce landscape."

Despite its popularity, eBay still has room to grow in terms of traffic, and this acquisition should help in that area, said Jupiter's Freeman Evans. "Even though eBay has an enormous amount of customers coming on a regular basis to the site, there are people who don't visit eBay. To able to effectively reach them on a regular basis through other concentrated channels is a good thing," she said.

eBay, a titan in the consumer-to-consumer and business-to-consumer e-commerce space, is an online marketplace in which sellers market their products via either fixed-price listings or auctions., on the other hand, is a free comparison shopping search engine that lets consumers compare the prices and features of millions of products from thousands of merchants. It makes money by charging merchants for inclusion and placement in its search index.

Considering that the business model is different from eBay's, PESA's Garriss trusts eBay executives will be wise enough to integrate the comparison shopping business properly into the eBay fold. "It is a new type of marketplace for eBay. I'm believing eBay will rely on some of the knowledge has developed to execute properly" the integration, Garriss said.

EBay should try to replicate the approach it has taken toward integration of PayPal into its overall service, said Jupiter's Freeman Evans.

"Letting operate as an independent entity will be a good thing while bringing the general benefits of being part of eBay," she said. "EBay has done a good job of nurturing PayPal and using PayPal services within their organization to build both businesses, but also allowing PayPal to grow externally. EBay has a pretty good track record with this kind of ownership."

Some financial analysts also praised the planned acquisition. "We believe the acquisition is consistent with the company's strategy to expand its presence into the broader e-commerce market," wrote a team of research analysts from J.P. Morgan Securities Inc. In addition to expanding the sales channel for existing eBay merchants, the acquisition may also attract new sellers to its platform, they wrote.

Meanwhile, David Edwards, a research analyst with American Technology Research Inc., praised the deal for two reasons. It increases eBay's exposure to ads, and specifically to paid search results, and it may help eBay retain large merchants that are unhappy about the company's fees and other issues, he said. "We believe that a well-executed integration of the eBay and platforms provides an avenue for merchants to extend their reach by selling products via from their own websites," he wrote.

EBay is offering to buy all outstanding shares of stock at $21 per share in cash, or about $620 million. EBay had annual revenue of $3.3 billion and net income of $778.2 million in 2004, while had $99 million in revenue and net income of $12.2 million in the same year.

Source: The Industry Standard

Advertise on E-Commerce News

Advertise on E-Commerce News and increase your site's visibility while boosting your sales.

If you have a product or service that deals with the ecommerce or ebusiness field, advertising on E-Commerce News can bring you new sales leads and close new marketing channels. This news portal is read by over 25,000 people a week.

Businessmen and woman that either own an ecommerce website, an ebusiness franchise, a B2B commercial exchange or by people in all walks of life that need to keep abreast of this fast-changing field. For more information on the many advantages of advertising on our news portal or to request pricing information, please send us an email and a marketing representative will be glad to answer you promptly.

Contact | Submit News | News Archives | Home

Copyright E-Commerce News, 2005. All rights reserved.

Avantex offers professional Web hosting services at wholesale-only prices. Get the best Linux or Windows hosting package for your eCommerce website. Learn more by clicking here.