DSW last week announced it will acquire online footwear and accessories retailer Ebuys, Inc. for an upfront payment of $62.5 million and future payments contingent on the performance of Ebuys, Inc.
Ebuys will continue to operate as a separate business, keeping its offices in San Diego, CA, and Antioch, TN, and keeping on CEO David Duong.
Founded in San Diego in 2003, Ebuys sells branded discounted footwear and accessories in North America, Europe, Australia, and Asia, and also operates e-commerce sites ShoeMetro and ApparelSave.
DSW has been working diligently to blur its brick-and-mortar and e-commerce operations, and fulfillment is a big piece in its puzzle. Its ship-from-store model — DSW is shipping about half its e-commerce sales from its 430 stores — is helping boost sales but is also proving to be a challenge when it comes to costs, president-CEO Mike MacDonald said last year. The retailer moved to cut costs by shipping from stores with excess inventory of the products ordered online, rather than from nearby stores, since proximity wasn’t helping keep fulfillment costs down.
So far analysts have had a mixed view of DSW’s acquisition of Ebuys, with some saying that it will boost its e-commerce and omnichannel efforts but others leery of Ebuys’ penchant for discounts, saying it could cause a direct conflict between brands and DSW.
“We have doubts about the long-term viability of the Ebuys business model because of its reliance on offering deeply discounted pricing on brands it sells, oftentimes disrupting vendor pricing strategies," Canaccord Genuity Inc. analyst Camilo Lyon wrote in a note Wednesday, according to Footwear News.