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EcommerceBytes-NewsFlash, Number 1619 - September 12, 2007 - ISSN 1539-5065    2 of 4

eBay Services Consolidation: ChannelAdvisor Acquires Marketworks

By Ina Steiner
EcommerceBytes.com
September 12, 2007




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ChannelAdvisor has acquired Marketworks, adding to the consolidation in the eBay auction-management space. Last year, Vendio acquired the assets of Andale. All four companies were founded in 1999 to provide eBay sellers with auction-management tools and services.

ChannelAdvisor, which did not disclose the purchase price, said it will continue to support and invest in Marketworks' customers and products. It will allow customers to move from one platform to the other. ChannelAdvisor CEO Scot Wingo said of Marketworks, "They have some large customers that have been interested in moving to ChannelAdvisor over the years, but there hasn't been a great way, an automated way, of getting them over. So we're going to create bridges both ways."

ChannelAdvisor will keep over half of the Marketworks staff in areas such as technology, brand services and customer service. Marketworks CEO Doug Hadaway and others on the management team will stay only a few weeks to help during the business integration.

Prior to the acquisition, ChannelAdvisor had 20 percent of the market share of eBay's largest sellers, Wingo said, referring to Titanium PowerSellers selling $150,000/month and more on eBay. With the acquisition, he said the company will have a 30 percent share of eBay's Titanium-level sellers. "That was one of those things that drove our thinking."

As far as marketing, Wingo said, "We've got to figure out the branding. We'll have Merchant and Marketworks. We may keep those names, we may choose to rebrand to make it clear. But (Marketworks) will be a product offering of ChannelAdvisor rather than a separate company."

ChannelAdvisor will be positioned as the higher end platform with more multi-channel options. The company will integrate Marketworks' Professional Web Store (PWS) with ChannelAdvisor. Marketworks customers wanting to use ChannelAdvisor's comparison engine and search advisor services will have to use either Marketworks PWS or port over to the ChannelAdvisor platform.

Competition between the two companies has always been fierce. Last year, Marketworks filed a complaint against ChannelAdvisor for hiring a former employee who was allegedly bound by a non-competition agreement. (A ChannelAdvisor spokesperson said due to the acquisition, the litigation would become a non-issue.)

Alec Peters founded Marketworks in 1999, then called Auctionworks, and brought on Chief Technology Officer Jerry Ablan through the acquisition of his company, Auctionspy.net. Peters stepped down as CEO in 2005.

Both companies have raised millions of dollars in funding - ChannelAdvisor has raised $67 million, while Marketworks has raised $16.4 million. ChannelAdvisor said it managed over $1.6 billion in gross merchandise value (GMV) on behalf of its customers in 2006, and after the acquisition, it will manage $2.5 billion in GMV, which would put Marketworks GMV at about $900 million. It's interesting to note that ChannelAdvisor and Marketworks' combined GMV from last year is the equivalent of 5 percent of eBay's $52.5 billion GMV generated from its global marketplaces business in 2006.

ChannelAdvisor had been in talks with Marketworks for 45 days, according to Wingo. "They had started a process of looking at alternatives for their company, and we were pulled in as part of that process."

ChannelAdvisor said following the acquisition, it would have 5,500 customers on a global basis, with 2,500 coming from Marketworks, and operating offices in North Carolina; Washington; Georgia; Bacharach and Berlin, Germany; London, England; and Melbourne, Australia.

ChannelAdvisor supports multiple ecommerce marketplaces including eBay, Amazon.com and Overstock.com, comparison shopping engines and search engines such as Google, Yahoo and MSN.

http://ww2.marketworks.com

http://www.channeladvisor.com

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

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