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eBay Loses as Toys R Us Brings Website Operations In-House

eBay Enterprise is losing an important client, as its parent eBay Inc. is continuing to try to sell the unit as part of its big breakup. Toys R Us announced on Thursday it will bring its U.S. ecommerce operations in-house, including building and managing a new platform for Toysrus.com, Babiesrus.com and FAO.com. The company expects to launch its own online platform by the end of summer 2016.

eBay Enterprise told EcommerceBytes that Toys R Us would continue to use its ship-from-store and in-store pickup technology across North America, Europe and APAC. In a statement, eBay Enterprise President Craig Hayman called Toys R Us an innovator and said, “We value Toys”R”Us as a long term client, and we look forward to providing them these kinds of modular solutions to power their evolution moving forward.”

eBay is in the process of trying to unload the Enterprise unit as its management breaks up the company. While it seems this development would impact negotiations, a spokesperson told EcommerceBytes the Toys R Us announcement “doesn’t impact plans for eBay Inc. and eBay Enterprise.”

Reuters reported on Thursday that private equity firm Thomas H. Lee Partners LP is in the lead to acquire the unit, citing “people familiar with the matter.”

Reuters said the price was rumored to be close to $1 billion, which would be a significant markdown.

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eBay Enterprise consists of GSI Commerce, which eBay acquired in 2011 for $2.4 billion, and Magento, which eBay acquired the same year (terms were not disclosed, but it had acquired 49% of Magento in 2010 for $22.5 million).

Like Skype, eBay was unable to realize synergies from the acquisitions. In 2011, eBay CEO John Donahoe said the acquisition of GSI Commerce would significantly strengthen eBay’s ability to connect buyers and sellers worldwide, and said eBay intended to lead the next generation of commerce innovation. “Combined with eBay Marketplaces and PayPal, we believe GSI will enhance our position as the leading strategic global commerce partner of choice for retailers and brands of all sizes,” he said at the time.

But in January of this year, eBay said it had become clear that the Enterprise unit had limited synergies with either eBay or PayPal.

Toys R Us launched a store on eBay in 2010 and was featured in an eBay television commercial in 2012. The retailer was a poster child for what smaller sellers believed was wrong with eBay as it helped onboard inventory from large retailers at the expense of small sellers.

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Ina Steiner
Ina Steiner
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.