QUOTE AND NEWS
TechCrunch  Jan 20  Comment 
Members-only shopping site RueLaLa, a former subsidiary of GSI Commerce (before the eBay acquisition) just cut roughly 60 positions from its workforce of 550 employees, but an SEC filing published yesterday afternoon reveals that the flash sales...
StreetInsider.com  Oct 12  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Corporate+News/eBay+%28EBAY%29+Integrates+Facebook+Open+Graph+into+Magento+and+GSI+Commerce+Platforms/6851689.html for the full story.
TechCrunch  Sep 12  Comment 
When eBay bought GSI Commerce for $2.4 billion in cash and debt in March, it was somewhat surprising to lean that the e-commerce giant's founder and CEO Michael Rubin was not staying on with eBay. Instead of joining his new parent company, Rubin...
StreetInsider.com  Aug 30  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Corporate+News/GSI+Commerce+%28GSIC%29+Selected+by+Dollar+General+%28DG%29+to+Launch+Its+eCommerce+Business/6752352.html for the full story.
TechCrunch  Jun 20  Comment 
eBay announced its $2.4 billion acquisition GSI Commerce in March, and today the e-commerce giant has announced that the deal has been closed. In a release, eBay said that GSI's stock holders approved the deal late last week, with the merger...
Stock Blog Hub  Jun 16  Comment 
E-commerce service provider, eBay Inc. (EBAY) has reached an agreement with GSI Commerce Inc. (GSIC) to settle claims made by shareholders of the latter. The claims, which were related to eBay’s proposed acquisition of GSI, had been filed in the...
StreetInsider.com  Jun 13  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Corporate+News/eBay+%28EBAY%29+%26+GSI+%28GSIC%29+Declare+Claims+Regarding+Settlement+of+Proposed+Acquisition/6575847.html for the full story.
TechCrunch  May 9  Comment 
eBay last month announced that it has agreed to buy GSI Commerce, a provider of ecommerce and interactive marketing services, for $29.25 a share, or total consideration of approximately $2.4 billion. Under the terms of the merger agreement, GSI...




 
TOP CONTRIBUTORS

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.

Business Financials

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.

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U.S. E-Commerce Sales as Percent of Total Retail Sales (Adjusted/Unadjusted for Seasonal Variations)

Trends and Forces

  • Growth of E-Commerce: The Internet has become infused into the everyday lives of Americans, including consumer purchasing habits. The e-commerce industry has grown rapidly and is expected to continue growing strongly for several years. In the retail categories GSI currently serves, online sales of nearly $81 billion represented approximately 9.3% of total retail sales in those categories in 2006. This figure is expected to grow at an estimated 16.5% CAGR to $144.4 billion by 2011(14.4% of total retail sales in the selected categories). As GSI expands its client base by furthering its presence in currently targeted sectors and branching out to other retail categories it is in a position to take leverage the overall growth of e-commerce. However, GSI is somewhat handcuffed by its own success. If an e-commerce program becomes very successful for a particular retailer, that customer may bring their e-commerce operations in-house in order to more closely control and capitalize on online sales.
  • International Expansion: GSI recently acquired the Spain-based e-commerce outsourcing provider Aspherio S.L. and re-launched the company as "GSI Commerce Europe." GSI made this $4 million acquisition in order to serve growing and developed markets throughout Europe as e-commerce grows there. It is too early to tell what kind of success GSI will have in Europe, but it hopes to draw from its experiences in working in the U.S. with international-based companies such as eBay's Skype and Hewlett-Packard.
  • Client Concentration Issues: The bulk of GSI's revenue is generated from contracts with their top clients, a relatively concentrated group. Specifically, 53% of revenue and 41% of gross profit came from contracts with GSI's top five clients. Furthermore, 68% of GSI's revenue came from clients in the sporting goods category. The next largest client categories after sporting goods are apparel, consumer electronics and health & beauty. Changes in the markets for sporting goods or apparel can have a large effect on GSI's business.

Competition

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.





References

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