In its second-largest acquisition, Amazon buys the company for $970 million.
(Page 3 of 3)
Adapting GSI's network of warehouses, which are geared mostly to serving retail chains, to the needs of thousands of smaller eBay sellers would be a difficult transition, says Scot Wingo, CEO of ChannelAdvisor Corp., which helps merchants sell through eBay and other marketplaces. But it wouldn't be surprising to see eBay develop more ties with companies like Bongo International LLC and FiftyOne Inc., which handle overseas fulfillment for retailers, he adds.
Marks says eBay already has expanded fulfillment and shipping options by opening up its e-commerce technology to outside partners. The Magento e-commerce platform, for example, integrates with Shipwire Inc., a company that provides warehouse space and fulfillment software for retailers. Rovio Entertainment Ltd., the company behind the popular Angry Birds online game, uses Shipwire to warehouse and ship inventory for orders of apparel and accessories from its Magento e-commerce site, Marks says.
Although eBay hasn't said whether such fulfillment services will be available directly to sellers on eBay.com, the company suggests that its long-range strategy is for X.Commerce to make it easier for software developers to provide new services to eBay merchants. "By bringing together the technology assets and developer communities of eBay, PayPal and Magento ... the X.Commerce ecosystem provides tools that are designed to drive innovation for online, mobile, social and local commerce," eBay says in its 2011 annual financial statement.
Renewing the old guard
One ongoing challenge eBay faces is cooperating with its legions of e-marketplace sellers. Many of them bristle at the new standards—such as shipment tracking and one-day order handling—that eBay is requiring for merchants to achieve top-seller status and the preferred terms that go with it.
"Donahoe's management staff doesn't know diddly about their customers—eBay's sellers," says Herb Oberman, an eBay Power Seller who since 1998 has specialized in selling collectibles popular with travelers, like restaurant menus and hotel brochures from popular vacation destinations.
Oberman contends that many sellers face the tough choice of either absorbing the cost of shipment-tracking or losing the discounted seller fees that go with top-seller status. Either way, the seller loses while eBay gains more revenue, he says.
Other eBay sellers say the changes are necessary to build consumer confidence. "We think the overall policy changes will be good for the eBay marketplace and narrow the shopping experience gap between eBay and Amazon," says Matthew Scriff, cofounder and president of diversified products retailer 3Gorillas.com.
Oberman, meantime, has found eBay lacking in other ways. To complement his sales on eBay.com, he now operates an online store on the Amazon platform. He had tried eBay's ProStores, the platform eBay has offered since 2005 to eBay sellers that want their own e-commerce sites as well as a store on eBay.com, but he found it lacking in terms of functionality and traffic-generating design. "We tried ProStores, but consumers didn't find us," he says. He adds that traffic to his Amazon site has been strong.
This is another area where X.Commerce, and the ties with GSI and Magento, are coming more into play, Marks says. Wingo of ChannelAdvisor agrees. Magento, with its relatively large community of software developers, he says, offers a strong alternative to ProStores for growing small and midsize e-retailers, and GSI's new version 11—though behind schedule—should improve eBay's place with larger multichannel retailers.
EBay's new technology portfolio is still under construction, but the company seems well on its way to growing beyond its auction-house roots.