eBay acquires brands4friends for $200 million

World's largest auction site pays hefty fee for Germany's biggest online shopping club for fashion

EBay announced Monday morning that it has acquired Germany’s largest online shopping club, brands4friends, for €150 million (approximately $200 million).

The deal is intended to secure eBay a place in the growing international fashion marketplace. A shopping club centered on fashion, brands4friends is a site where members can buy high-quality items at heavily-reduced prices. Inventory is often limited and changes day-to-day.

Founded in 2007, brands4friends now boasts about 3.5 million members in Germany and has hosted campaigns with over 600 brands, including Buffalo, Calvin Klein and Diesel. The company employs about 200 at its Berlin headquarters.

The company two years ago had raised €10 million in a third round of funding led by Partech International along with existing backers Mangrove Capital and Germany’s own Holtzbrinck Ventures. At the time, brands4friends had cited a study that found fashion to be the fastest growing segment in German e-commerce, growing 18 percent year-over-year to €4.6 billion.

eBay’s own research says online shopping clubs account for approximately 20 percent of online fashion sales.

Now, eBay wants a piece of that market.

“We want to give our customers the best possible fashion experience online,” said Doug McCallum, Senior Vice President for eBay in Europe. “With the acquisition of brands4friends, we will enter the online shopping club market with an established and dynamic partner who has the expertise, relationships and passion to match our own ambition. We expect many eBay customers will enjoy great deals on international fashion brands by joining the brands4friends community.”

While many thought e-commerce to be an exhausted market with Amazon and eBay already sitting pretty on their multi-billion dollar retail and auction thrones, respectively, the industry has been changing over the last couple years in subtle ways. Besides deal-of-the-day sites like Groupon, which appear to be a dime a dozen these days, shopping clubs like brands4friends have been cropping up increasingly, often raising funds from high-profile U.S. investors.

Two private online shopping clubs based in the U.S. include Gilt Groupe and HauteLook.