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Latest eBay acquisition aims at expanding reach and brand impact

31 March 2011 - 12:15 by Simon Crisp

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Online auction giant eBay has spent almost £1.5 billion on the acquisition of e-commerce firm GSI Commerce, in the hope that it will be able to use its expertise to grow and take on rivals like Amazon.

GSI Commerce has created platforms for safe shopping online which are used by major retailers like Toys R Us and fashion labels such as Ralph Lauren.

There are a number of firms which eBay has acquired over the years, including online payment service PayPal and VoIP calling company Skype, which it bought for a little over £1.6 billion six years ago.

Some are suggesting that the acquisition of GSI is part of eBay's plan to make its business model a little closer to that of Amazon. At the moment it lacks the kind of infrastructure to see through consumer's orders from the point of purchase to the actual delivery, which is something which Amazon has always been able to offer.

John Donahoe, chief executive of eBay, said that GSI had a track record of bringing consumers and big retailers together in an effective manner, which is something that the auction site is hoping to accomplish.

The long and the short of the deal is that eBay may be able to attract manufacturers and product brands onto its e-commerce platform and allow people to buy goods direct from its site. This will mark a significant change in the way eBay works, with it no longer acting as the intermediary between people with things to sell and those looking to buy.

It is unlikely that eBay will be able to dethrone Amazon in the short term, but with growing competition in the market for safe shopping online it can only spell out good news for consumers.