eBay's on the Acquisition Path

eBay (Nasdaq: EBAY  ) is doing some holiday shopping of its own.

BusinessInsider.com is reporting that the company behind the leading auction website and the popular PayPal platform is buying Milo.com for $75 million.

It seems a surprising choice, at first. Milo has been called the anti-Amazon for its ability to send traffic to bricks-and-mortar merchants. The local shopping engine scours prices and availability in real time for area stores, arming Web-savvy consumers with the ability to get what they want in a manner of minutes, instead of days through e-commerce.

Wait a minute. Won't eBay be sending potential buyers away from its auction sellers? PayPal's penetration in cyberspace is impressive, but the same can't be said for physical retail. Isn't Milo really more of the anti-eBay than it is an enemy of Amazon.com (Nasdaq: AMZN  ) , shooing buyers away from Web-based auctions and financial transactions?

Buying Milo begins to make a lot more sense when you realize that Milo is unlikely to be incorporated into eBay.com itself. Just as eBay's free classified websites are incremental to eBay's flagship business, most visitors to Milo or eBay won't even realize that there's a corporate connection.

There may still be synergy. If a search for a product on Milo exhausts its selection of 3 million locally available products through 52,000 stores -- including Best Buy (NYSE: BBY  ) , Toys "R" Us, and Target (NYSE: TGT  ) -- a link to the folks selling it through eBay would be a win-win solution.

It would be trickier, but traffic can flow the other way under the right circumstances in a way that would make sure eBay sellers are keeping their prices honest.

Sure, snapping up Overstock.com (Nasdaq: OSTK  ) or the majority stake of MercadoLibre (Nasdaq: MELI  ) that it doesn't already own would be more logical purchases, but eBay already telegraphed a move into physical comparison shopping when it acquired barcode scanning app giant RedLaser this summer.

Milo makes sense, especially at a price point that provides a sharp contrast to Google's (Nasdaq: GOOG  ) Groupon insanity.

What should eBay buy next? Share your thoughts in the comments box below.

Best Buy and Google are Motley Fool Inside Value selections. Google and MercadoLibre are Motley Fool Rule Breakers picks. Amazon.com, Best Buy, and eBay are Motley Fool Stock Advisor recommendations. Motley Fool Options has recommended buying calls on Best Buy. Motley Fool Options has recommended a bull call spread position on eBay. The Fool owns shares of Best Buy and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Longtime Fool contributor Rick Munarriz is a satisfied eBay user with 178 positive feedbacks to show for it. He does not own shares in any of the companies in this story. He is also a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. The Fool has a disclosure policy.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 02, 2010, at 8:09 PM, phoebe44 wrote:

    This is exactly the type of thing that is sending e-bay sellers away in droves. Pretty soon, ebay will be just another site for the Targets, Wal-Marts, etc. and all the prices will be the same - so not much need for Milo -

    IMO, Milo will drive customers away from ebay to Amazon and Overstock.com and the many new sprouts who are drooling to take ebays sellers. Unless ebay specifically controls whose prices Milo can display, it's good-bye ebay and Milo.

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