Why is GSI buying all those software companies?
GSI's plan to buy ClearSaleing Inc., of Ohio, is its fourth interactive-marketing software purchase in less than a year
GSI Commerce Inc., the King of Prussia warehouse-distribution-analytics firm that ships and tracks online sales for Adidas, Dick's Sporting Goods, the NFL and hundreds more retailers, says its interactive-marketing arm is buying ClearSaleing Inc., an online ad and order tracking software firm based in Columbus, Ohio, for an undisclosed price.
Though GSI has already used ClearSaleing for dozens of clients, including Nieman Marcus and Nationwide Insurance, the firm's sales totalled maybe $5 million last year, and the 24-person company is roughly breaking even, estimates Shawn Milne, Internet analyst at Janney Montgomery Scott in Philadelphia.
So why does $1 billion asset-plus GSI bother? Because this is a rapid-growth area: GSI's Interactive Marketing Services unit enjoys a profit margin of up to 20%, and is growing at an annual rate of 40%, Milne reports.
Milne estimates Interactive Marketing Services, though it still accounts for a relatively small portion of GSI's 4,000-plus empoyees, is now worth nearly half of GSI's total $1.6 billion market value.
But he doesn't expect it will be sold off anytime soon. GSI is still building up the unit: Before today's deal, GSI had bought three other online-sales software vendors in less than a year, including FetchBack Inc., VendorNet Inc., and M3 Mobile.