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eBay’s Next Few Acquisitions

Posted on Friday, Jun 8th 2007

eBay’s StumbleUpon acquisition is done. I wrote about it, in eBay’s Foray’s into Media. Not much to add on the topic, except that the price has changed. eBay eventually ended up acquiring the company for $75 Million.

One critical point I made in my previous analysis is that eBay needs to plug the leakage in its advertising budget. Today, they spend Millions in customer acquisition costs. Improving on this piece of the P&L would add a lot to the earnings of the company.

The question is, what are the efficient ways of doing so?

One category that has heated up massively in the startup scene is Vertical Search. Collectively, the vertical search engines are driving huge traffic. I have previously written about some of the ones that focus specifically on Shopping: Wize, TheFind, Retrevo, etc.

Each of these have a unique way to pull users into the shopping experience. Wize and Retrevo focus primarily on Consumer Electronics. TheFind focuses on Lifestyle shopping. There are many others. It seems to me, that eBay’s next few acquisitions ought to come from within these Vertical Search portals. Most of them pay commissions to a merchant shopping network like Shopping.com. Under eBay’s parenting, they can all be forced to go through Shopping.com. However, the user experience they each offer, have unique value propositions, and could also be great new entry points into eBay’s shopping engine.

Among other things like moving Shopping.com up the food chain, this would certainly be a good way to keep the advertising money circulating inside the company, rather than making Google richer!

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That is certainly the direction they are headed. If you want to get an idea of eBay’s M&A strategies they want to be the Shopping Search Engine. Also, they are looking for additional verticals to fill holes in their Marketplace biz ala StubHub.

Also look for them to improve their local efforts. It takes at least 18 months for them to launch something in-house, acquisitions take far less time.

Randy Smythe Friday, June 8, 2007 at 4:25 PM PT

Makes a ton of sense, finally! Just imagine how many of these vertical search engines and comparison shopping sites they could have bought for the price of that Skype acquisition?

Sramana Mitra Friday, June 8, 2007 at 5:32 PM PT

[…] the company wasted a lot of money on a pointless Skype acquisition. It would be better off with a vertical search and vertical portal roll-up strategy now, because they need to speed things […]

eBay’s Vertical Classified Strategy - Sramana Mitra on Strategy Friday, July 6, 2007 at 6:51 AM PT