Paying $620 million in cash for a company with $12 million in 2004 earnings, eBay gains a presence for selling in-season, early-lifecycle merchandise and opens to eBay's base of more than 50 million active users.

In a deal that creates a new competitive environment for online comparison shopping, eBay will pay $620 million to acquire, the largest comparison shopping site in volume of traffic. EBay gains a presence for selling in-season merchandise while ties into eBay’s base of more than 50 million active users.

EBay says the acquisition, which it expects to close in the third quarter, will also support eBay’s community of sellers by exposing them to a broader audience of shoppers while also providing’s shoppers with direct access to eBay’s product listings. had 22.6 million unique visitors in April, up 15% from a year ago, making it the largest comparison shopping site in traffic volume, according to comScore Media Metrix. Nielsen/NetRatings, which also ranks as the highest-traffic comparison shopping site, puts its April total of unique visitors at a more modest 14.6 million.

ComScore adds that 13.8 million consumers visited both and in April, when the two sites reached a combined total of 71 million consumers. 22% of eBay visitors also visited, and 61% of visitors also visited, comScore says.

We see a lot of synergies between the two platforms, an eBay spokesman says. We’ll continue to help our sellers grow and succeed with a new set of buyers, and we’ll give the buyers on access to eBay listings.


But eBay isn’t saying yet just how it will integrate the two sites, though will continue to operate as a distinct site under the same brand and senior management. president and CEO Lorrie Norrington will report to eBay senior management, though eBay hasn’t yet determined who her direct superior will be, the eBay spokesman says.

The $620 million cash-for-stock deal is more than 50 times’s 2004 earnings of $12.2 million. The purchase price is based on eBay’s acquiring all of’s outstanding shares at $21 per share. Since the acquisition plan was announced on Wednesday,’s stock price has risen nearly 20% to about $21 from $17.44.

Iggy Fanlo, president of worldwide field operations for, said in an interview with Internet Retailer shortly before the eBay announcement that he views the online retail market as divided into three basic categories of fixed-price retail, auctions, and comparison shopping, led respectively by Amazon, eBay and We see the market as a tripod, eBay, Amazon and, he said.

Indeed, the deal puts pressure on other comparison shopping sites to consider whether and how they might link up with partners to also build traffic, experts say. Others have to think, do we stay alone or do we partner with someone, Scot Wingo, CEO of ChannelAdvisor Corp., a company that helps retailers connect with comparison shopping sites and e-marketplaces, said in a conference call with stock analysts at Bear Stearns.

Wingo added that, in addition to its large user base, eBay could offer some advantages such as letting eBay sellers use their eBay customer ratings to build reputations with shoppers and making it simple for eBay sellers to integrate their e-commerce systems with the platform.


But the heads of other comparison shopping sites took the news of the acquisition in stride, noting that it underscores the importance of the comparison shopping market as an online shopping channel.

It’s natural for eBay to tap into comparison shopping and fixed-pricing, which they’ve already been expanding into, says Kamran Pourzanjani, CEO of comparison shopping site From our point of view, it doesn’t change the landscape, but re-emphasizes the importance of comparison shopping.

Pourzanjani adds that PriceGrabber, a privately held company that doesn’t release financial statements, has grown its revenue more than 100% over each of the last five years and that it has 18 million unique monthly visitors, up 60% from a year ago.

Stephen Imbler, CFO of, says NexTag’s strength is in remaining an independent company that differentiates from other comparison-shopping sites by offering travel and other services as well as consumer products. He notes that 2005 will mark NexTag’s fourth consecutive year of more than 100% growth.

With such growth figures, comparison shopping sites are hoping there will be enough business to go around for years to come. Consumers love saving time and money, and that`s the value that comparison-shopping sites bring to millions of online buyers every day, says Chuck Davis, CEO of Shopzilla Inc., which changed its name from last fall. He adds that eBay’s acquisition of is not surprising. It stands to reason that investments should be following this growth trajectory, as comparison shopping is accelerating and not slowing down,” Davis says.