To my enormous surprise ChannelAdvisor has taken over Marketworks. I find this surprising as in my experience, people from Channeladvisor have had nothing good to say about marketworks. But then, that is probably true for all competitors.
As I understand it, the volume of GMV which was managed by the two companies is about the same. Channeladvisor’s strategy has been to go for the larger sellers, those of £20K or more a month, whilst marketworks has had a very much a self service model with a much cheaper monthly minimum.
Here is some speculation on the deal, in no particular order:
Marketworks’ product seemed to be rather undeveloped and badly optimised for local markets (e.g. UK users had to use US time), almost as if they weren’t investing in it any more. New entrant product such as eSellerPro and Kyozou which are much slicker and had a greater range of functionality have been gaining market share.
It seemed to me that that in the UK they had been focusing on their larger managed clients like 3M and Viking. However some of these clients had recently gone off line. I think that this had been due to a lack of performance and integration with their other channels.
This lack of development of the product had made me wonder where they were going, perhaps they have been looking for a buyer for some time…..
but large number of customers ….
Despite their poor product, Marketworks have a large number of customers, equal in GMV to ChannelAdvisor. Perhaps ChannelAdvisor thought that it would be cheaper to buy these customers than to gain market share organically.
At the end of the day, the ChannelAdvisor and Marketworks products are quite similar and so I am guessing that the Marketworks product will be closed down eventually. Larger customers will be migrated onto ChannelAdvisor whilst smaller Marketworks customers will be either pushed out by higher pricing or migrated onto a cheaper, self service version of Channeladvisor. It is interesting that ChannelAdvisors small business solution, ChannelAdvisorPro was closed down a while back.
The future of the Market
Whilst as Randy Smythe points out, eBay’s growth has slowed of recent, I think that there is still a huge opportunity for businesses in the multichannel software market. Analysis which I did of the top 500 sellers in the UK (admitedly by feedback) showed that less than 10% of them used any kind of auction management software. The combined company has 30% of the market for Titanium powersellers and 5% of eBay’s GMV, I bet that most of the remaining 70% of Titanium powersellers are still using turbo lister and Seller manger pro.
The challenge for the new company will therefore be to make make inroads into the majority of eBay powersellers who still haven’t realised the the 2% odd software fee is a good exchange for the amount of time it will save them and the potential to grow then businesses. I would also say that at the moment, ChannelAdvisor is a solution for eBay sellers wishing to dip their toe in the water of having a website and selling through other channels. With online sales growing so rapidly, they need to shift their focus to a stronger website offering.