ChannelAdvisor reviewed by eBay's Erik Stuart

Bambi Francisco Roizen · January 27, 2009 · Short URL: https://vator.tv/n/66f

What does eBay think of this valuable driver of sales to its marketplace?

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ChannelAdvisor, which helps merchants determine where to sell their wares across marketplaces, search engines and shopping sites, is the largest providers of seller tools to eBay's biggest sellers. Some 20% to 30% of the largest merchants using its service. It's a SaaS (software as a service) startup that's raised some $80 million since it began earlier this decade. EBay has been a fairly consistent investor in ChannelAdvisor throughout the years as well. Given that Erik Stuart's job as director of corporate strategy at eBay is to understand which companies for eBay to partner with or acquire, we asked him to be our guest host of this Vator Box segment.

Here are a few observations made in the show by Stuart, Ezra Roizen (Vator Box regular and digital media investment banker), and me.

- ChannelAdvisor CEO Scot Wingo gave one of the better pitches we've seen on Vator. It was precise, to the point, and comprehensive. Wingo clearly knew his business and value propostion. Be sure to catch it.

- As a dominant seller tool, it is a really important part of the e-commerce ecosystem and Wingo understands this category well. Over the years, he's built ChannelAdvisor into a "real" company, generating millions of dollars annually.

- The service is not one of high-margins. ChannelAdvisor is considering providing professinal services, which won't help to expand margins and is tough to scale.

- Given the tough economic environment, a portion of ChannelAdvisor's business model, which is to take a transaction fee, may be a challenge to extract from sellers. As Stuart puts it: "Squeezing a take rate is never an easy prospect."

- ChannelAdvisor has raised a significant chunk of money that it's created a big exit hurdle for itself.

- ChannelAdvisor tends to serve the larger merchants. But there are a number of other players offering their services for free, like Auctiva.

- Seller services are a good part of the eBay value chain, but it's unclear whether eBay needs to own rather than to partner with a third-party seller service. One way to leverage third-party services is through eBay's Project Echo, a site for developers to integrate with eBay's sellers tools.

 

 

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Bambi Francisco Roizen

Founder and CEO of Vator, a media and research firm for entrepreneurs and investors; Managing Director of Vator Health Fund; Co-Founder of Invent Health; Author and award-winning journalist.

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