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EBay to buy GSI Commerce as it competes with Amazon

March 28, 2011 |  1:46 pm

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EBay has agreed to pay $2.4 billion for GSI Commerce, an online retail and marketing company, in a move that could help the online auction site compete with Amazon.

The purchase of GSI "will significantly strengthen our ability to connect buyers and sellers worldwide," John Donahoe, EBay's president and chief executive, said in a statement. "Combined with EBay Marketplaces and PayPal, we believe GSI will enhance our position as the leading strategic global commerce partner of choice for retailers and brands of all sizes."

GSI works with more than 180 retailers and brands to underpin their online retail operations, the company said.

"Technology is changing how consumers shop, and retailers and brands are changing how they compete," Donahoe said. "With EBay, PayPal, GSI and our global platform capabilities, we are focused on delivering new ways for retailers and brands of all sizes -- from sole proprietors to large merchants -- to drive innovation, engage customers and help people shop anytime, anywhere and on any device."

The current leading online retail site is Amazon, which sells products through Amazon.com and mobile apps on smartphones and tablets. Most recently, Amazon has gotten into the business of selling apps for Google's Android operating system through its Amazon Appstore.

GSI's customers include brands such as Adidas, Calvin Klein, Hewlett-Packard, Mattel and sports leagues such as Major League Baseball, the National Basketball Assn. and the NFL. The Pennsylvania company receives and manages online orders, processes payments, maintains retail websites and handles some customer care services.

Under the deal, EBay would sell off GSI's licensed sports merchandise business and 70% of its ShopRunner and Rue La La businesses. ShopRunner is a members-only shopping website; Rue La La is an invitation-only website that offers daily discounts.

"EBay believes these businesses are not core to its long-term growth strategy," the company said of ShopRunner and Rue La La. "These assets will be sold to a newly formed holding company, which will be led by GSI founder and CEO Michael Rubin."

Rubin started GSI about 10 years ago and was recently featured on the CBS TV show "Undercover Boss."

EBay said it expects the deal, which is to be financed with a combination of cash and debt, to close by the end of the third quarter. Federal regulators and GSI shareholders have yet to approve the deal.

ALSO:

Google planning mobile payment test in San Francisco, New York

PayPal exec says publishers won't embrace Apple's App Store subscriptions

EBay acquires local shopping engine Milo

-- Nathan Olivarez-Giles

twitter.com/nateog

Photo: An eBay logo is seen at their offices in San Jose on Feb. 24, 2010. Credit: Paul Sakuma/File/AP Photo

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