News & Observer | newsobserver.com | Deal swallows a smaller fish

Published: Sep 13, 2007 12:00 AM
Modified: Sep 13, 2007 03:07 AM

Deal swallows a smaller fish

ChannelAdvisor is buying Atlanta's Marketworks, which also helps e-retailers

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ChannelAdvisor is putting its war chest to work.

After raising $30 million in venture capital this year, the Morrisville online commerce consultant announced Wednesday that it has inked a deal to buy Marketworks of Atlanta for an undisclosed sum. The purchase expands ChannelAdvisor's reach among smaller sellers in the evolving e-commerce market, officials said.

ChannelAdvisor develops software and marketing strategies that help retailers sell goods via search engines, comparison-shopping sites and online clearinghouses such as eBay, Amazon and Overstock. Marketworks does the same thing, but for much smaller sellers with less sophisticated accounting, shipping and inventory management needs.

"This deal dramatically increases our market share," ChannelAdvisor CEO Scot Wingo said. "It gives us an entry-level product that we haven't had until now. So we have a real cradle-to-grave solution, where as before we only had adolescent and up."

The online shopping market is increasingly complex, Wingo said. Rather than heading straight to stores or product-specific Web sites, consumers are going more often to search engines and online marketplaces where they can find and compare items, and choose from a wide selection of goods. That means retailers and manufacturers must look beyond their own Web sites to generate sales. About 75 percent of online commerce happens via indirect channels, according to market tracker FBR Research.

Wingo said the evolution of online selling increases the need for commerce coordinators that link sellers and buyers.

"Consumers now start their buying online through search engines like Google and Yahoo, comparison-shopping engines and marketplaces like eBay," Wingo said. "That's the trend that is the wind in our sails. It's where our software comes in to help them understand how to get their products into these channels."

With the acquisition, ChannelAdvisor will oversee $2.5 billion in merchandise on an annual basis, up 57 percent from $1.6 billion. The deal expands the company payroll to 340 from 300. Most of the new workers are in Atlanta.

ChannelAdvisor will keep Marketworks' Atlanta office and consolidate the company's two European offices into existing operations in England and Germany.

The Marketworks deal is the third acquisition for ChannelAdvisor, which was founded in 2001.

Asked whether ChannelAdvisor remains on the prowl for more acquisition targets, Wingo said its newest investor, New Enterprise Associates, would expect so. "They like companies that grow big fast, so that's our strategy," he said.

Staff writer Frank Norton can be reached at 829-8926 or frank.norton@newsobserver.com.
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