Shop Or You Drop
eBay have been on a shopping spree lately. On the list - Shopping.com for US$620m and two free classifieds sites (Gumtree and Loquo) bought for an undisclosed amount.
Shopping.com is basically a price comparison service, and is an amalgation of Epinions and Dealtime. Making life easy for consumers and generating leads for retail affiliates turns out to be a pretty profitable business, which is why Google also has the sector in its sights.
From eBay's perspective, you might imagine that the transaction will gain them some additional traffic for its sellers. Then again, too much competition from low priced auction items will only serve to lower affiliate revenues from its retail partners. The real motivation behind the deal is probably eBay's slowing revenue growth. As Robert Leathern, Marketing Director of Linkedin observes on his blog, the shopping.com acquisition smacks of desperation.
Even more curious, is eBay's growing fascination with acquiring sites which seem to cannibalise its core revenue stream. Gumtree and Loquo are being added to the Kijiji network, which previously featured only non English sites, and are the latest installments in the eBay free classified love affair which began with its investment in Craigslist.
All of this is perhaps not so strange when you consider that some of today's web giants such as Yahoo and eBay have been around close to a decade now. Once you get past surviving the growing pains of a sudden rise to multi billion dollar market capitalisation - you suddenly have the ongoing pressure of demonstrating consistent quarterly earnings growth.
That is hard enough when you are a traditional company. When you are a new economy upstart, it is no longer enough just to be profitable. Everyone sits around waiting for your next magic trick.
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