An executive from Rainbow Shops discusses email marketing tactics and results at Shop.org.
As the recession ebbed late last year, e-commerce deal-making picked up among technology vendors. Companies are making deals to bring in specialized skills from smaller firms.
E-commerce deal-making picked up late last year as the recession ebbed, and the pace accelerated sharply last month, with several e-commerce technology vendors buying smaller players.
Technology companies are making these deals to add the specialized skills of smaller firms, allowing the combined company to provide a fuller range of services, says Larry Bohn, managing director of General Catalyst Partners, a venture capital firm with holdings in such e-commerce technology vendors as Demandware Inc., ChoiceStream Inc. and Brightcove Inc.
"Merchants want to get as much value as they can out of their core vendors," Bohn says.
A brighter outlook
The brightening economy is also driving deals, says Amish Jani, managing director of venture capital firm FirstMark Capital, which includes Conductor Inc. in its e-commerce portfolio.
"If you believe the world is going to improve in the next few years," Jani says, "this is the time to buy things on a value basis, create scale and drive critical mass for market leadership when things turn."
Buyers can find acquisitions at attractive prices, he adds, because some start-ups are having trouble finding financing since the economic downturn forced investors to pull back from new deals.
The pace of deal-making picked up in the fourth quarter, with a 74% increase in the dollar value of acquisitions in the digital media segment that includes e-commerce, reports investment bank Petsky Prunier. And e-commerce deal announcements came rapidly last month. They included:
- E-commerce platform provider Art Technology Group Inc. paid $17.0 million in cash for InstantService, which provides live chat services to 300 clients, including retailers Nordstrom, Orvis and Ritz Interactive. ATG, whose client base totaled 900 before the deal, had earlier invested in this arena in 2006 when it spent $48.3 million to acquire eStara, a provider of live chat and click-to-call services. The ATG and InstantService offerings will be sold together for now, and eventually merged, ATG says.
- Covario Inc., a provider of paid search software and services, acquired Netconcepts LLC, which specializes in search engine optimization. The purchase price was not disclosed. The combined company will have nearly 100 clients. Retailer users of Netconcepts` GravityStream system include Cabela`s, Northern Tool and Ann Taylor.
- Marketing and personalization application provider Unica Corp. acquired Pivotal Veracity, whose technology aims to ensure e-mails make it to inboxes, for about $17.8 million. Unica had previously integrated the Pivotal Veracity technology into its software. The deal will enable Unica to provide a more comprehensive offering, says Unica CEO Yuchun Lee.
- Powered Inc. acquired three companies, aiming to become a full-service social media agency. Powered bought social marketing consulting firm Crayon, marketing agency Drillteam, and social and mobile marketing firm StepChange. "Our capabilities are highly complementary and allow us to provide a full suite of services to global brands," says Ken Nicolson, Powered CEO.
Also in January, two online retailers were acquired by larger merchants:
- Apparel manufacturer and web merchant Kellwood Co. acquired Isis, a maker of women`s outdoor performance and casual apparel that also sells online. The purchase price was not disclosed. Kellwood is an affiliate of private equity firm Sun Capital Partners Inc.
- PrintGlobe Inc., a web retailer of business printing products and supplies, acquired Absorbent, Ink, an e-retailer of specialty corporate gifts. No purchase price was announced.