In a surprising yet very interesting move, eBay has decided to buy Shopping.com for $620 million in cash today. This could be a good synergy for the two of them. Shopping.com faces an increasingly commodotized battle in a crowded space (Shopzilla, BizRate, NexTag, PriceGrabber, mySimon, Froogle and countless others) and eBay's stock took a hit recently after analysts freaked when eBay showed signs of slowing growth. Shopping.com's share price is also lagging lately, due to lack of investor confidence in their aggressive expansion and marketing plans. With this acquisition, Shopping.com gains resources, a potential traffic source, and a bit of insulation from the short-term focus of the street. EBay gets a little shot in the arm in terms of traffic, one of the better product catalogs in the business (normalized product catalog is not a trivial undertaking), user opinions (from Epinions) and also a foothold to expand its dealings with more established online retailers. That said, aside from technical issues that they will surely need to surmount if they choose to tightly integrate the sites, there are potential business issues witht existing Shopping.com merchants, who may be unhappy at the prospect of being undercut by eBay sellers. With its involvement in Craigslist, eBay grows more in local/person-to-person commerce. Now, with Shopping.com integrated, its fixed-price offering grows. This is just another volley in the continuing battle for net domination between Google and eBay. eBay's announcement today reinforces their strategy to be the online "shopping portal" for all goods -- it's not just Pez dispensers anymore (and yes, we know the founding Pez story was a big lie).
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