Ebay Using GSI Buy To Move In-Store
Written by Frank HayesRetailers don’t want another Amazon—they want cheaper payments in-store. That’s what eBay seems to have figured out. On Monday (March 28), the online auctions giant announced that it’s buying GSI Commerce, which provides E-Commerce services to 180 retailers, including Ralph Lauren, Toys”R”Us and Sports Authority. Most of those GSI clients already use eBay’s PayPal online, so the plumbing is already in place. Now eBay just has to convince those retailers to use PayPal in-store, too.
That’s not a done deal by any means. But PayPal has already said it plans to get its payment system into brick-and-mortar stores by the end of 2011, and earlier this month hired a former gift-card executive, Don Kingsborough, to make that happen. Getting 180 friendly retailers to sign on will make it much easier to break the plastic monopoly on in-store payments—something no other alternative payments system has been able to do.
Payments? Really? eBay wants the world to think of it not as a mini-Amazon but as a way for retailers to get out from under the thumb of Visa and MasterCard?
Consider: With eBay’s deal to purchase GSI for $2.4 billion, the auction giant is taking great pains to show that it doesn’t want to compete with big retailers the way Amazon does. eBay is spinning off GSI’s actual retail businesses, including the licensed sports gear that GSI has sold since it was founded, along with the Rue La La and ShopRunner shopping services.
Shaking off anything that even looks like it might be competition for big retailers isn’t coincidental. eBay knows Amazon has been trying to get big retailers on board for alternative payments for years. No one’s biting. (Remember PayPhrase? Neither does anyone else.) A big part of the problem: Amazon is Amazon, the biggest online retailer and a de facto competitor. That’s what eBay doesn’t want to be.
Instead, the GSI deal gets eBay into the E-Commerce services business, providing everything from marketing to order fulfillment—and, oh yes, payments. Most of the 180 retailers that are already GSI clients are accepting PayPal. The back-end processes are already in place. In theory, that should make moving PayPal from online to in-store with these retailers much more palatable.
-Marc
March 31st, 2011 at 10:49 am
I think you are missing the most important aspect for brick-and-mortar stores, the interchange fees. More precisely the lower interchange fees that PayPal is promising. There are a lot of traditional retailers that are starting to look at other forms of payments in hopes of lessening this expense. It is obvious that this is what will lead to the adoption of PayPal and other forms of payment.
March 31st, 2011 at 11:53 am
The story in question actually did address the interchange issue (“The only way for eBay to make PayPal truly worthwhile for retailers is to significantly cut the cost”) but, to your point, it didn’t stress it that much. Then again, we have talked about the fee being the most crucial aspect of this a dozen times–and it’s not like most retailers don’t know that already, so not so sure about how much obvious that point should have been made. Interchange (and related costs) ARE the issue. If PayPal gets everything else right but charges as much as or more than Visa does, it won’t work. And if PayPal charges a lot less than the brands, they can get a heck of a lot wrong with everything and STILL win the day. So, yes, we probably should have at the least moved the interchange reference much higher in the story.
March 31st, 2011 at 2:43 pm
Why would eBay need to buy a bank to cut Visa/MC out of the loop? PayPal already has at least one banking license in Luxembourg.