GSI Commerce (GSIC) is one of the world's leading e-commerce outsourcing firms. GSI's clients are typically retailers who would like to sell over the Internet, but do not yet have established online presences. For many companies, building an ecommerce website in house doesn't make sense because of up-front costs - but these companies don't want to ignore the Internet as a sales channel altogether. GSI sells these companies e-commerce websites in a box. Clients customize a look and feel, and GSI takes care of everything else, from providing basic software to run the website to shipping, logistics, and customer service services. Clients can "buy-up" and have GSI take care of marketing the site and bringing in potential customers.
In return for its efforts, GSI takes a portion of sales from the new site. GSI is a way to invest in the e-commerce trend. However, the company is fairly concentrated as its top five customers accounted for over half of all revenues in 2006. In addition, 68% of all revenues came from customers in the sporting goods category, making the company susceptible to swings in that retail sector. Current GSI clients include Dick's Sporting Goods, Radioshack and Polo Ralph Lauren (RL). In 2007 GSI generated over $750 million in revenue, however due to hefty charges related to legal matters the company earned less than $5 million from its operations on the year.
GSI's revenue comes from the sales of products through the websites it operates for its clients as well as additional service fees it charges. Depending on its contract with a particular client, GSI may be compensated for the e-commerce products and services with a combination of a percentage of the sales from a client's online retail operations and/or a flat or performance-based fee payment structure.
In 2006, GSI had net revenues of $609.6 million. Sales of products and service fees accounted for $461.2 million and $148.4 million, or 76% and 24% of total revenue respectively. A large portion--approximately 68% of product sales ($314.7 million)--came from clients selling sporting goods, a sector which served as a historical springboard for the company. The percentage of sales coming from sporting goods companies has decreased over time as GSI has built out offerings for a broad spectrum of retail companies. GSI's business has grown rapidly in conjunction with the growth of e-commerce in the past five years, with net revenue nearly doubling in two years from $335.1 million in fiscal 2004.
As an e-commerce solutions provider, GSI competes most often with the in-house technical divisions of potential clients. In the arena of third-party e-commerce service providers, GSI is one of the largest in terms of revenue and client base. Its most direct competitors are Amazon.com, which offers e-commerce services from within its own technology division, and Digital River (DRIV). Both of these companies offer comprehensive, integrated e-commerce solutions packages similar to those provided by GSI. Other competitors include a variety of firms that compete with GSI on specific products and services that GSI offers to its clients. However these companies do not offer the same comprehensive, integrated solutions that GSI does and therefore they are considered indirect competition.
Web-Platform Services: These companies offer the design and construction of online retail websites and the software used to operate these online stores.
Logistics and Distribution Services: These companies provide clients with the services of storing, packaging, shipping, and delivering Internet-originated orders.
Consulting Services: These firms offer strategic consulting services geared towards improving the efficiency, value and profitability of online retail operations.
Customer Care Services: These companies provide outsourced customer service departments including call centers and e-mail inquiries to e-commerce clients.
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