Online commerce giant eBay Inc. will sell off its fulfillment
arm to a consortium of private equity groups for $925
million, a move that returns eBay to its roots as a virtual
marketplace and bucks a trend of e-commerce firms like
Amazon.com Inc. expanding their logistics operations.
The company will sell its eBay Enterprise unit to London-based Permira Advisers, Chicago-based Sterling Partners,
and Toronto-based Longview Asset Management Ltd., the
companies announced July 16. eBay used its Enterprise
division, based in King of Prussia, Pa., to offer warehousing and logistics services to third-party sellers, including
large retailers like The Sports Authority (TSA Stores Inc.),
PetSmart Inc., and Ikea Systems B.V. Enterprise provided
global logistics service through five divisions: its “Magento”
e-commerce software platform, order management, customer care, marketing, and fulfillment. It operated nine distribution centers in the U.S., Canada, and the U.K. for eBay.
The purchase marks an expansion of Sterling’s investment in the sector, following its 2014 acquisition of
Innotrac Corp., an Atlanta-based company that runs 11 fulfillment centers in the U.S. and eight in Europe for e-commerce businesses, including Target Brands Inc., Groupon
Inc., and Ann Taylor Inc.
Joining that group provides increased resources for
growth, Enterprise president Craig Hayman said in a post
on the company blog. “Since January, we’ve been thoughtfully exploring all avenues for our future. We believe this
deal will give us the most opportunity to continue focusing
on our areas of proven strength and help our clients win in
an incredibly evolving market,” Hayman said.
He pledged continued commitment to eBay Enterprise’s
current clients and promised that the buyers would release
more details about future business plans after the deal had
closed.
“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,” Hayman wrote in the blog post.
That optimism matches Enterprise’s own business
research, as shown in an April survey of e-commerce retail-
ers titled “2015 Retail Growth Outlook.” The study showed
that 72 percent of respondents expected online revenue to
increase by an average of 17 percent.
Despite these positive signs, the fulfillment unit was not a
strategic fit with eBay’s core mission, said one analyst.
“The tool set of eBay Enterprise was originally thought
to better position eBay to compete with the likes of Amazon
through a technology platform, but it was really divergent
from the core eBay business, which is an online auction-en-
abled marketplace,” said John Santagate, research manager
for supply chain execution at IDC Manufacturing Insights,
an analyst group based in Framingham, Mass.
Unloading Enterprise could allow eBay to differentiate
itself from e-tailers like Amazon and “get back to its roots”
by focusing on a more diverse set of smaller sellers offering
specialty products rather than big retailers hawking com-
modities, Santagate said.
In pursuit of that goal, new eBay CEO Devin Wenig
made the decision to sell the division after noting that
eBay Enterprise had contributed just $300 million of the
company’s $4.4 billion in revenue during the second quar-
ter. Those meager financial results made it expendable in
pursuit of eBay’s long-term strategy, said Santagate.
—Ben Ames
eBay sells off fulfillment arm go figure …
6.6%
The second-quarter industrial vacancy rate in 38 U.S.
markets. That is 60 basis points below year-ago levels
and the lowest quarterly rate since the first quarter
of 2011.
SOURCE: CUSHMAN & WAKEFIELD’S MID-YEAR REPORT
alliances
Honeywell has joined with Microsoft Corp. to deliv-
er the Windows Embedded 8. 1 Handheld platform
to Honeywell’s latest mobile solution, the Dolphin
75e mobile computer. … Oxford, U.K.-based
Electrocomponents plc, a worldwide engineering prod-
ucts distributor, has purchased Amber Road’s Trade
Automation Export Management solution to expand
sales of its products worldwide. … Logistics Plus Inc.
and Lynx Fulfillment have published a case study,
“The Benefits of Outsourced Fulfillment,” that provides
examples of the warehousing and distribution solutions
the two companies can implement for small and medi-
um-sized businesses looking to sell their products in
the U.S. … Banneker Industries, a third-party logistics
services provider, has been named by the Naval Surface
Warfare Center as a prime contractor on the Navy’s
Seaport-e contract vehicle. … McLeod Software and
Logistical Labs are working to integrate Logistical Labs’
pricing platform, LoadDex, with McLeod’s freight-bro-
kerage operations management system, PowerBroker.
