In its second-largest acquisition, Amazon buys the company for $970 million.
2011 has already ushered in a bunch of big e-commerce deals likely to produce big changes in the online retailing landscape.
The first several months of 2011 have been chockablock with significant e-commerce deals that promise to produce major changes in the online retailing landscape.
Leading pharmacy retail chain Walgreen Co. plans to spend $429 million to acquire web-only Drugstore.com Inc.; e-marketplace powerhouse eBay Inc. says it will pay $2.4 billion for e-commerce technology and services provider GSI Commerce Inc. and also plans to buy mobile shopping app provider Where; Wal-Mart Stores Inc. intends to buy mobile and social technology provider Kosmix Corp.; Nordstrom paid $180 million for flash-sale online retailer HauteLook, and flash-sale e-retailer Gilt Groupe Inc. bought home furnishings and interior design company Decorati.
And that's only the activity by retail companies. In a move that could help it compete against Apple Inc.'s iTunes online music store, search king Google Inc. last month bought PushLife, a company that enables consumers to sync their mobile phones with desktop software like iTunes and Windows Media Player applications that store consumers' music files.
Monsoon Commerce Inc., a provider of technology that helps retailers sell through e-marketplaces, acquired Stone Edge Technologies Inc. The deal gives Monsoon's clients direct access to Stone Edge's order management and supply chain management applications; Stone Edge integrated its order management software with 40 vendors of online shopping carts as it built a base of 2,500 e-retailer clients. Monsoon, the parent company of online bookseller Alibris.com, serves more than 20,000 online sellers in more than 50 countries.
In another technology deal, SmartBear Software, a provider of web site development and testing tools, acquired web site monitoring company AlertSite Inc.
The two deals with the largest immediate impact on online retailing, however, are the acquisitions by Walgreen and eBay.
Walgreen, which uses the Walgreens brand on its e-commerce site and chain of more than 7,500 stores, stands to rocket ahead of its close online rival, CVS Caremark Corp., with its purchase of Drugstore.com. The deal will give Walgreen total online sales of more than $730 million, compared to $232.7 million for CVS, according to 2010 sales figures in the 2011 Internet Retailer Top 500 Guide.
"This acquisition offers a unique opportunity that will provide us immediate access to more than 3 million savvy, online loyal customers," says Walgreen CEO Greg Wasson. "And it will allow us to move even closer to our existing customers through relationships with new vendors and partners, adding approximately 60,000 products to our already strong online offering."
The acquisition of Drugstore.com and its other brands, which include Beauty.com and Skinstore.com, also will help Walgreen become a more diversified multichannel retailer of health and beauty products, says Sona Chawla, Walgreen president of e-commerce.
EBay's acquisition of GSI Commerce, meanwhile, has big implications for both companies and their clients. GSI's more than 200 retailer clients, many of them sizable retail chains like Toys 'R' Us and Sports Authority, will have direct access to eBay.com as a marketplace for unloading out-of-season merchandise, while eBay sellers will be offered GSI's sophisticated online retail, fulfillment and marketing services. "The acquisition provides a nice cradle-to-grave selling channel for the GSI customers, and better services for eBay—which is not very good at merchant services right now," says Paula Rosenblum, managing partner with RSR Research.
In particular, GSI's expertise in operating retail sites and providing fulfillment services for its clients will help eBay better compete against its biggest rival, Amazon.com Inc.
"This is largely driven by Amazon, with its wildly successful marketplace and Fulfillment by Amazon services," says Scot Wingo, CEO of ChannelAdvisor Corp., which helps retailers sell through online marketplaces including Amazon and eBay. "The competition is intensifying between eBay and Amazon, and eBay needs to merge that gap or face becoming obsolete."