

Forrester wave for ecommerce platforms 2009
GSI announced today that it’s selling out to eBay for $2.4B, which is a lot of money for an also-ran player in the ecommerce space. But that’s not what drew my attention on this. It’s the parts that eBay isn’t buying, or maybe that Michael Rubin wanted to keep for himself: shopRunner and ruelala.
ShopRunner is essentially Amazon Prime for the rest of us schmucks that don’t work for The Empire. It’s a federation of online retailers who offer up yearly subscriptions to customers. Pay $50 once, and enjoy free overnight shipping for the rest of the year– A good deal, actually if you buy more than 6 or 7 items a year online. The subscriptions are transferable across retailers. If you’re a shoprunner member on shoes.com, then you’re also a member on sportsauthority.com or drugstore.com or borders.com (if they last through the summer). ShopRunner has a future of becoming a serious consumer powerhouse– it knows what everyone is buying across all those sites, it can bring discounts, and it can introduce new properties to consumers. It’s all about logistics and customer fulfillment now, and ShopRunner is in a great place.
RueLaLa is a private deal site. I’m less impressed about this part. I think the ‘deal of the day’ site is cool and all, but it may have run its course in terms of growth. The ‘private sale’ model likely has an even shorter half-life: once people realize that the perception of exclusivity is just that, a perception, then the passion will fall off, and RueLaLa will wind up for what it really is: a discount outlet for branded goods. Sales will be solid, but outlets are never sexy. There may be an exportable SAAS model there, and I know that RueLaLa has been trying to put that together, but I also know that converting one site into a SAAS platform pretty much requires a complete tear-down and rebuild, or starting from scratch. At that, RueLaLa is really just a cash-flow to fund something else. We’ll see on this one.
On the other side of this deal, eBay is moving up the value chain a bit, and picking up some legitimacy in the process. Let’s be honest, when you hear the word “eBay”, how many of us instantly think “beanie babies” and “random junk flea market”? eBay has a branding problem, and that’s caused a revenue problem: eBay was never taken seriously as a shopping platform for “real” companies, even though they have a huge amount of traffic and do an enormous amount of sales. Theoretically this all changes now with the acquisition of GSI: it’s a true B2C ecommerce platform and fulfillment/logistics network. (GSI always differentiated itself from the other platforms by offering not just the website infrastructure, but the fulfillment warehousing and other logistics goodies).
eBay was always a distant 2nd place behind Amazon. This doesn’t really change that, but it does indicate a different tack: rather than try to go against Amazon head on in terms of product mix and navigation and pricing, eBay is showing that its’ going for the Taobao model: build up a store from the grass roots small vendors by providing them an ever growing amount of tools and merchandising functions, then cement in the relationships with an exclusive payment method and legitimate company retailers in the mix. Taobao, for those of you who’ve never heard/seen of it, pretty much owns the China market to a level that Amazon could only dream of: some estimates put over 70% of ecommerce going through Taobao at one point or another.
eBay is looking to solidify it’s own market space. Consumer-to-consumer sales? check. B2C sales? check. In-house payment method? check. Fulfillment value chain? check. The only thing missing now is physical retail space. I used to think that Amazon would buy Sears or Target. Now, eBay may get a shot.
eBay made a smart move on this. Michael Rubin made an even smarter one.
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