Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Thu Apr 11 2013 22:02:07

eBay Vendor ChannelAdvisor Files to Go Public

By: Ina Steiner

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ChannelAdvisor, a company that helps online merchants sell on eBay, Amazon and other marketplaces and as well as comparison shopping engines, filed today with the SEC to take the company public and plans to list its common stock on the New York Stock Exchange under the ticker symbol ECOM. For anyone curious about ChannelAdvisor's financials, there are some nuggets revealed in the prospectus, some of which I share below.

ChannelAdvisor has raised millions of dollars from investors - and going public is one way for them to hope for a return on their investment. eBay itself participated in a funding round when ChannelAdvisor went through a particularly rough patch in 2008 and had to lay off 20% of its workforce. That round brought the total raised to $80 million. At the time, some believed eBay had to participate since ChannelAdvisor clients made up a significant portion of eBay's Gross Merchandise Volume in the U.S. ("too big to fail" syndrome).

In addition to ChannelAdvisor, there was a cluster of companies back in the early 2000's who helped online sellers sell on eBay, including Andale, AuctionWatch (which became Vendio), AuctionWorks (which became MarketWorks), Auctiva and Zoovy.

Unlike most of the other inventory management service providers at the time, ChannelAdvisor went after large brands and retailers in addition to servicing PowerSellers, and CEO Scot Wingo publicly supported eBay's focus on fixed-price over auction listings. It also expanded overseas and has a presence in Europe, Australia, and recently opened an office in Hong Kong.

Some of the founders/CEOs of those early ecommerce vendors famously didn't get along with each other. I always suspected eBay had something to do with some of the tensions among developers (in addition to big egos and fighting for their piece of the pie). Looking back, eBay used to charge developers $5,000 to go through a certification process and then pay up to $10,000 a year plus $2.90 per 1,000 API calls - in order to integrate their listing tools with the eBay Marketplace. These were companies who helped sellers list on its site, thereby helping eBay make money. It was difficult to pass those costs along to eBay sellers - even in those days, there wasn't a lot of profit margin in selling on eBay.

It's interesting to see what has become of some of those eBay inventory management companies. Vendio bought Andale, whose founder Munjal Shah went on to find success in a new company called Like.com, which he sold to Google for what some guessed was close to $100 million.

Alibaba acquired Vendio and Auctiva, which are still operating, as is Zoovy.

ChannelAdvisor acquired MarketWorks and folded it into the company.

Because of the amount of money they raised (in addition to the founders' ambitions), Andale and ChannelAdvisor always wanted to go public.

Why file for the IPO this week isn't clear - ChannelAdvisor states in its prospectus it is an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012 (the JOBS Act), and said it intends to take advantage of some of the exemptions from reporting requirements that are applicable to other public companies that are not emerging growth companies.

Here are some interesting factoids and abstracts from the preliminary prospectus, you can find it on the SEC.gov website.

- ChannelAdvisor earned revenue of $53.6 million in 2012.

- ChannelAdvisor incurred a net loss of $4.9 million in 2012 (and had a net loss for the past three years included in the filing).

- ChannelAdvisor's gross margin, based on total revenue, expanded from 66.8% in 2010 to 72.5% in 2012.

- Founder and CEO Scot Wingo owns 10.6% of shares in the company; Aris Buinevicius owns 8.6%. It did not reveal how many shares Michael Jones, a former VP now at eBay, owns.

- Kodiak Venture Partners owns 24.4%; New Enterprise Associates owns 24%; Advanced Technology Ventures owns 18.5%.

- ChannelAdvisor has an accumulated deficit of $79.5 million as of December 31, 2012.

- Scot Wingo earned $125,000 in salary in 2011 and 2012 -

- Under "Risk Factors" (which always sound dire in an IPO prospectus) the company writes, "While we anticipate that our existing cash, together with availability under our existing credit facility, will be sufficient to fund our operations for at least the next 12 months, we may need to raise additional capital to fund operations in the future or to meet various objectives."

In its press release on Thursday, ChannelAdvisor said billions of dollars in merchandise value are driven through its platform every year and it has thousands of customers.

There's a lot to wade through in the filing, which you can find on the SEC website.




Comments (6) | Leave Comment | Permalink

Readers Comments

Perminate Link for eBay Vendor ChannelAdvisor Files to Go Public   eBay Vendor ChannelAdvisor Files to Go Public

This user has validated their user name. by: Ming the Merciless

Fri Apr 12 04:10:03 2013

I remember when Scot Wingo used to post here under his real name until he angered too many sellers with his pact with the devil.

I don't think this is good news for most gold powersellers and below. Undoubtedly one of their prime objectives will be recruit still more Chinese plastic junk sellers to sell on ebafia and Amazero.

These outfits are incestuous and share a singular disregard for business ethics, but I had to laugh when ebafia no longer allowed third party checkouts which pretty much did ChannelAdvisor in.

ChannelAdvisor is asking people to invest their money yet seem delighted they can evade certain reporting requirements.

This is certainly the transparency that would inspire me to invest.

All this double secret online selling stuff makes my head spin.

Perminate Link for eBay Vendor ChannelAdvisor Files to Go Public   eBay Vendor ChannelAdvisor Files to Go Public

This user has validated their user name. by: Rexford

Fri Apr 12 07:39:03 2013

I always wondered if Wingo purposely deleted comments that did not align with his thinking on his blog.  I finally stopped reading it because I felt that he was not being fair and balanced.  As I remember it finally got to the point where one's comments had to be approved before they would be seen on his blog.  

He appears to me to be very data driven and I sometimes questioned his common sense.  If I remember correctly, he once used the term "Martha Cranky Pants" in one of his comments to describe small sellers who were making noise regarding changes at eBay.  I found that to be very offensive.

I feel that he was/is all for the changes that JD was/is making at eBay because it  helps his business.

Needless to say, I won't be investing.

Perminate Link for eBay Vendor ChannelAdvisor Files to Go Public   eBay Vendor ChannelAdvisor Files to Go Public

This user has validated their user name. by: Ric

Fri Apr 12 11:07:42 2013

When Scot Wingo's blog seemed to become an outlet controlled and manipulated by eBay's department of spin, I stopped reading as well. If I ever desire to read all the eBay generated self aggrandizing puffery, I get it straight from the horses mouth.

The minute eBay became an investor in Channel Advisor, it seemed as though all objectivity regarding eBay disappeared.

When I feel something warm and wet falling on my head, I know it is coming from eBay, and I do not need Scot Wingo to try and convince me it is raining.

Perminate Link for eBay Vendor ChannelAdvisor Files to Go Public   eBay Vendor ChannelAdvisor Files to Go Public

by: JackieBlue This user has validated their user name.

Fri Apr 12 11:12:01 2013

We used Channel Advisor for a year.  I would never do it again - they charged a % of sales and added very little value.  Their website software is really, really bad.  If anything went wrong you cannot call them - only the sales dept has a phone number. I was paying about $1200 a month for this.  We tried Zoovy and they are pretty bad technology wise, it just doesn't work.  We ended up writing an in-house solution for maintaining inventory across marketplaces (we sell on eBay, Amazon, NewEgg, and our own webiste, dropped Sears and Buy.com) as well as downloading orders, printing postage, uploading tracking ,etc.  Works a lot better and a hell of a lot cheaper!

Perminate Link for eBay Vendor ChannelAdvisor Files to Go Public   eBay Vendor ChannelAdvisor Files to Go Public

This user has validated their user name. by: Ed Gadfly

Fri Apr 12 11:36:53 2013

Got to serve the best interests of the shareholders.

The rest of you can fend for yourselves.  

Perminate Link for eBay Vendor ChannelAdvisor Files to Go Public   eBay Vendor ChannelAdvisor Files to Go Public

by: NullApps This user has validated their user name.
Web Site

Sun Apr 14 07:14:22 2013

Those egregious costs eBay was charging delayed me from considering the eBay API by at least 5 years.  Now I go through over 2000 calls ($5.80 back then) every minute every day.



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