EBay to buy German online club in European push

BANGALORE, INDIA: Web commerce company eBay Inc marked its foray into online shopping clubs with an offer to buy Germany's brands4friends for about $200 million in cash, to boost its presence in European fashion retail.

Online shopping clubs, which pool members to get group discounts, are getting hotter as customers flock to the Web for deals and discounts.

Amazon.com recently invested in online coupon company LivingSocial, and Google Inc had an unsuccessful run at buying discount coupon provider Groupon.

Brands4friends, with about 3.5 million members, is Germany's largest online shopping club. It sells goods from fashion and lifestyle brands including Buffalo, Calvin Klein and Diesel at discounts of as much as 70 per cent, according to its website.

"EBay has focussed a lot on the fashion vertical ... and brands4friends is a great cornerstone in building that," Stephan Zoll, general manager for eBay in Germany, told Reuters.

EBay estimated that online shopping clubs now make up 20 per cent of Internet fashion sales in Europe.

The company has been investing heavily in its fashion business, including opening eBay Outlet in the UK and Germany, to let customers buy directly from fashion brands.

"So far, the (brands4friends) deal is focussed on Germany. However, we can leverage the expertise that brands4friends has in the shopping club area internationally," Zoll said.

Analysts at Lazard Capital indicate the site is adding up to 10,000 new members and selling up to 33,000 items each day.

EBay does not expect the acquisition to have a material impact on its 2011 financial results. The deal is expected to close in the first quarter of 2011.

Last week, the company bought Critical Path Software, a mobile software application developer that has been developing its applications for Apple Inc's AAPL iPhone, which has been downloaded more than 14 million times.

EBay's three biggest markets are in the United States, Germany and the UK. Germany accounted for $1.14 billion, or 13 per cent, of its total net revenue in 2009.

But eBay warned in a U.S. regulatory filing earlier this year that winning new shoppers in Germany, among other markets, could become "more difficult and costly," given how mature e-commerce is there. EBay's main competitors in Germany include the e-commerce sites, Quelle and Otto.

As part of the agreement, eBay said it would assume brands4friends' stake in British shopping club SecretSales.com and in Japan's brands4friends.jp.