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ChannelAdvisor bolsters its online services to manufacturers with an acquisition

November 7, 2014 02:56 PM
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ChannelAdvisor Corp. is acquiring United Kingdom-based technology firm E-Tale Holdings Ltd. as part of its growing effort to provide services to consumer brand manufacturers seeking to develop their online businesses.

The 5-year-old E-Tale markets a “Where to Buy” program to manufacturers that lets consumers visiting brand sites see authorized resellers that have the product the consumer is looking for in stock. E-Tale clients include manufacturers such as Samsung, LG, Nintendo and Unilever. According to a ChannelAdvisor filing with the U.S. Securities & Exchange Commission, ChannelAdvisor U.K. will pay at least $8.2 million in cash for E-Tale at the scheduled closing date in April, and up to another $4.0 million depending on whether E-Tale meets certain financial targets. The filing does not say what those targets are. ChannelAdvisor will absorb E-Tale staff.

ChannelAdvisor CEO Scot Wingo says demand by brands for services targeting their online needs has been growing. “They are starting to think more about going direct [to consumers online] and are getting more aggressive in their online strategies,” he says. “The end point is like what Nike and Under Armour do online. But many more are early in that lifecycle, with no roadmap on how to get there.”

Nike Inc. generated more than half a billion dollars in revenue selling directly to consumers via the web last year. It ranks No. 64 in Internet Retailer’s Top 500 Guide. UnderArmour Inc., with an Internet Retailer-estimated $220 million in 2013 web sales, is No. 126. Last year Under Armour said it wants to one day generate 25% of its sales online. Of the 500 e-retailers in the Top 500 Guide, 13.6% of them are consumer brand manufacturers, the smallest of the business categories types by number of merchants. The other three are web-only retailers, retail chains and catalogers.

With the E-Tale acquisition, ChannelAdvisor is also launching a ChannelAdvisor for Brands business segment. Along with the E-Tale technology, it includes ChannelAdvisor’s existing marketplace and digital marketing services, but with those services tailored to the needs of brand manufacturers. “We’ve found that brand manufacturers have a different vocabulary and different way of thinking about things,” Wingo says. “So we are using a different voice for those brands that want to learn more about our solutions and see different ways to use our products.”

ChannelAdvisor also reported its Q3 financials yesterday. For the third quarter ended Sept. 30, ChannelAdvisor reported:

  • $21.0 million in revenue, up 26.5% from $16.6 million for the third quarter of 2013.
  • It added 108 core customers during the quarter. ChannelAdvisor had 2,781 core customers at the end of the third quarter, up 21.6% from 2,287 a year ago. (Core customers are those who subscribe to at least one product, excluding those from two companies ChannelAdvisor acquired prior to 2008.) New clients include Focus Camera Inc., No. 173 in the Top 500 Guide; ThinkGeek Inc., No. 185; South Moon Sales Inc., No. 890 in the Second 500 Guide; and Boohoo.com, No. 197 in the Europe 500.
  • 79% of revenue came from fixed subscriptions to ChannelAdvisor services, up from 70% in Q3 2013. Variable subscription fees accounted for 21% of total revenue versus 30%.
  • ChannelAdvisor began providing support for three German marketplaces: MeinPaket.com, Rakuten.de (formerly PriceMinister) and Zalando. 
 

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