When eBay bought GSI Commerce for $2.4 billion in cash and debt in March, it was somewhat surprising to lean that the e-commerce giant’s founder and CEO Michael Rubin was not staying on with eBay. Instead of joining his new parent company, Rubin announced he would form a new independent company that would include the GSI businesses that eBay didn’t want (or more kindly put, were ‘not core to the company’s long-term growth strategy’). These businesses included GSI’s licensed sports merchandise business, Fanatics, ShopRunner and flash sales site Rue La La. Today, Rubin is officially announcing the new holding company, called Kynetic, which for now features the e-commerce businesses mentioned above.
Fanatics is a retailer for licensed sports merchandise for colleges, professional sports teams & leagues, conferences and media networks. Fanatics encompasses four sectors: direct-to-consumer retail, third-party eCommerce syndication, licensing and manufacturing, and fulfillment services. The company helps power the official online stores of the NFL, NBA, NHL, MLB and NASCAR.
ShopRunner is a members-only online shopping service that offers consumers unlimited, free two-day shipping with no minimum order size. ShopRunner aggregates shopping benefits from retailers and brands including Lord & Taylor, Toys”R”Us, Sports Authority, GNC, Domino’s Pizza, PetSmart and Newegg.com.
And RueLaLa is a Gilt Groupe-competitor that offers discounts on clothes, travel, home goods and more. RueLaLa was actually part of GSI’s $350 million purchase of Retail Convergence in 2009.
As we heard in march, eBay is loaning Kynetic $467 million in total, while Rubin in investing an additional $31 million in cash in the business. You have to wonder why eBay passed on these companies (perhaps they weren’t making any money?) earlier, especially RueLaLa, considering eBay has been interested in flash sales.
But there are other factors at play. eBay CEO John Donahoe told reporters in March that Fantacis’ sports merchandise business could compete with eBay seller. As for RueLaLa and ShopRunner, he wasn’t optimistic about eBay’s ability to run the businesses, saying “I would characterize it as a near-term operating loss and a huge opportunity that if we tried to realize, we’d probably screw it up.”
It should be interesting to see if Rubin, who clearly saw success running GSI Commerce, can create a viable e-commerce company from Kynetic.