eBay sells its eBay Enterprise e-commerce technology business
July 17, 2015 12:13 PM
When eBay Inc. acquired e-commerce technology company GSI Commerce in 2012 for $2.4 billion, its senior executives said the acquisition would enable eBay to compete against Amazon.com Inc. and others as a technology provider, as well as a mass market online retailing company.
But eBay has since headed in a different direction, turning to focus on its core online marketplace business. The company announced Thursday as part of its second-quarter earnings results that it agreed to sell eBay Enterprise for $925 million—61% less than what it paid for just GSI Commerce in 2012—to a group of investment firms. The transaction is expected to close in the second half of this year. The buyers are Sterling Partners, Longview Asset Management and Innotrac Corp., along with companies owned by the Permira Funds, according to a blog post by eBay Enterprise president Craig Hayman.
“Rest assured, eBay Enterprise remains committed to its clients,” Hayman writes, adding: “We are excited by the opportunity ahead, as it allows us to continue to create new ways for retailers, brands and branded manufacturers to leverage their existing technology investments, to get to market quickly, and innovate to stay ahead of the competition.”
178 of the top 1,000 online retailers in North America use either the free Community edition or Enterprise versions of the Magento platform, according to Internet Retailer’s Top500Guide.com. That makes it the top e-commerce platform provider to the largest e-retailers. And more than 250,000 websites operate on the Magento platform, according to research firm BuiltWith Pty Ltd. Magento is based on open-source software that provides access to the core software code for making modifications. Most Magento sites operate on the Community Edition, while the most complex Magento sites are on Magento Enterprise. The annual fee for Magento Enterprise, which comes with more built-in features, starts at about $18,000.
Peter Sheldon, vice president and e-commerce technology analyst at Forrester Research Inc., says Magento should do well under its new owners, who can be expected to continue build on eBay’s investment in Magento’s technology. “Magento is one of the jewels in the portfolio, and I would expect the private equity consortium to not only continue with all committed resources but likely increase the resources.” He adds that he expects the forthcoming Magento version 2.0, which is being designed with more features for B2B as well as retail sites, to launch as expected later this year.
Magento also is popular among a number of manufacturers, wholesalers and distributors who have deployed it for business-to-business e-commerce. Boxing goods manufacturer Everlast Worldwide Inc., for example, relaunched Everlast.com this year on Magento Enterprise to offer better functionality for its online customers, Everlast director of e-commerce Mike Ebert says. He adds that Magento also supports responsive design, which renders Everlast’s web content properly on mobile as well as desktop screens.