EBay Enterprise is hitting the refresh button.
EBay Inc. has completed the sale of eBay Enterprise, the final stage in a long dismantling of the tech giant, which was formerly composed of three businesses: the eBay marketplace, PayPal and eBay Enterprise.
When eBay Inc. begun restructuring — it spun off payment arm PayPal earlier this year — the company sold eBay Enterprise, the commerce solution segment of the business, to Sterling Partners and Longview Asset Management in July for $925 million. Permira Funds acquired Magento, the e-commerce provider under the eBay Enterprise umbrella that powers almost 250,000 online stores. EBay Inc. is now completely independent of former subsidiaries PayPal and eBay Enterprise, and each is now a stand-alone company.
“We’re doubling down on what comes after the click, which is the commerce operations part. This is where all your inventory gets moving, you collect your money — and you have to provide a great consumer experience,” Tobias Hartmann, president of the newly formed eBay Enterprise, told WWD on Tuesday. “Clicking and checking out is one thing, but what happens after is more important.”
EBay Enterprise will join forces with Innotrac Corp., one of Sterling’s portfolio companies, to develop e-commerce solutions that focus on welding the on- and off-line shopping environments. Together, the organizations will have a staff of 7,500 and 27 distribution centers that serve six customer service portals spanning North America and Europe. Combined operations won’t begin until after the holiday season, and Hartmann said the new company will undergo a rebranding starting early next year. The combined venture already serves about 200 global brands and retailers, including Aéropostale, Dockers, Ralph Lauren, Godiva and Kate Spade.
For Hartmann, everything that happens post-click — shopping options, order routing technology, risk management, customized shipping options and branded customer service — is integral to gaining consumer loyalty and executing an optimal shopping experience. In the past, he explained, retailers and brands were focused on their Web stores, but this is a misnomer. Yes, consumer behavior might be increasingly dictated by mobile phones and multichannel experiences, but this a contradiction to how sales are actually happening. Retailers are still heavily reliant on their physical stores, both because that is where the lion’s share of inventory lies and where most foot traffic and sales occur. Technology needs to reflect this.
“This leads to the question around how do you actually manage your inventory across your enterprise? How do you respond to omni shipping options and consumer behaviors where people shop on- and off-line?” Hartmann said, listing services like adapting delivery options from same-day to overnight, as a place where retailers can gain a competitive edge.
Hartmann called commerce operations post-click the “critical high ground” for retailers and brands — and the sole thing eBay Enterprise will focus on going forward. Retailers need to have access to the right inventory, make sure the inventory is available and manage to get the product to the consumer in the fastest way at the lowest cost possible — all with a personalized, branded experience.
Omnichannel solutions started to become a reality about three years ago, said Hartmann, who joined eBay Enterprise in May 2011, and most recently served as vice president and general manager of the operation. In 2012, eBay Enterprise enabled several hundred stores to double as fulfillment centers — including units of Nine West and DSW — and now, more than 7,000 stores use varying omnichannel technologies.
“That turned out to be a new way of really capitalizing on the stores and local inventory,” Hartmann said, adding that if retailers want to win in both the on- and off-line worlds, they have to rethink their business processes, IT and operations landscapes.
“Imagine yourself on a Web site, and you place your order. After you click the checkout button, everything that starts there is what we stand for,” Hartmann said.
Peter Sheldon, vice president and principal analyst at Forrester Research, said eBay’s selling of Magento to Permira Funds — a sizable part of the $925 million deal — is sure to be positive for the now independent e-commerce platform. In 2011, eBay Enterprise came about from two acquisitions — GSI Commerce and Magento — the latter of which remained a stand-alone business unit under the parent company.
“We expect to see investments in research and development and renewed focus and strategy in serving the Magento community. It was always a distraction for Magento being part of eBay Enterprise,” Sheldon said, adding that under Permira’s management, Magento will again become an independent voice in the e-commerce space that will compete for market share with commerce platforms like SAP, IBM, Oracle and Demandware.
Sheldon said Magento, which caters mostly to small and medium-sized businesses, will likely thrive without the weight of eBay Enterprise as a parent company.
“EBay never really found a way to utilize it [Magento] within. Magento kind of got a little lost under the ownership of eBay Inc.,” Sheldon continued, explaining that the reason for the Magento acquisition was to drive adoption to PayPal and get merchants on the platform to use the payment system. “That was the main objective, but beyond that, eBay never really had a strategy for what they were going to do with Magento. It grew fivefold in four years, but the Magento community was always a little skeptical.”