EBay is on the acquisition trail as it looks for growth in new markets: today the auction giant announced that it would buy brands4friends, an online shopping club based in Germany, for €150 million ($200 million) in an all-cash deal. This is the second startup that eBay (NSDQ: EBAY) has bought in a week.
Brands4friends, which is based in Berlin, Germany, currently has around 3.5 million active users in its home market. It also has operations in Austria, Japan and the UK. The UK operation — an equity stake in the UK shopping club SecretSales.com — and the equity stake in the Japanese concern, brands4friends.jp, are both included in the eBay deal.
The acquisition is a significant one for eBay.
It comes at a time when the site is looking to rejuvenate and complement its existing online auction business. In Q3 results reported in October, eBay reported that revenue rose 1 percent to $2.25 billion compared to the same quarter a year before. But most of that growth seemed to come from the PayPal business: revenue in eBay’s “marketplaces” segment rose three percent to $1.41 billion, but revenue from payments (including PayPal), rose 22 percent.
At the same time, the company is looking to expand further outside of its home market of the U.S., where growth has been slower than it has been abroad. In Q2 this year, the company reported that nearly 60 percent of its marketplace sales, and more than 60 percent of PayPal transactions, came from outside the U.S.
Doug McCallum, Senior Vice President for eBay in Europe (from the release): “With the acquisition of brands4friends, we will enter the online shopping club market with an established and dynamic partner who has the expertise, relationships and passion to match our own ambition. We expect many eBay customers will enjoy great deals on international fashion brands by joining the brands4friends community.”
EBay is also playing catch-up to its greatest online retailing competitor, Amazon, which has made some big investments into the group buying craze: it bought shopping club BuyVIP for a reported price of €70 million ($98 million) in October, and earlier this month invested $176 million in the group buying site LivingSocial.
Like eBay’s purchase of Critical Path last week, brands4friends, looks like a complementary buy that will fit in with the assets that eBay already has. The companies have not worked together in the past.
Brands4friends was founded in 2007 and has around 200 employees. The site says it has featured some 600 brands in its sales offers to date. Investors in the site had included Partech International, Mangrove Capital and Holtzbrinck Ventures.