The acquisition, announced Wednesday, brings the Web's biggest comparison shopping engine under the hood of the largest auction site at a time when eBay has been struggling to maintain its growth in the face of increasing competition from Yahoo, Google and others.
eBay said the acquisition will help it funnel more bidders to eBay auctions.
"What we think this does is it helps us meet the evolving needs of our sellers," said eBay spokesman Hani Durzy. "That's the big motivation for us. The central reason we made this acquisition is to provide sellers with a new channel for selling and a new set of buyers."
Analysts said larger growth concerns inspired the buy.
"In the last year, eBay hasn't had the kind of growth it had in the past," said Saikat Chaudhuri, assistant professor of management at the University of Pennsylvania's Wharton School. "That's very logical, because you see a certain amount of maturation in the industry, and Yahoo was getting into their space and Google is playing around with Froogle comparison shopping. So they're all competing with each other, and eBay is looking for a way to grow in terms of adding customers and broadening its portfolio."
The acquisition puts eBay in close competition with the commercial engines of search giants Yahoo and Google. The deal also is a sure sign of eBay's financial interest in the booming search-engine marketing business, which is expected to be worth more than $5 billion this year.
Similar to Yahoo and Google, Shopping.com makes money from advertisements that appear adjacent to related search results. But unlike rivals, its sole specialty is in listing prices of commercial goods sold across the Web. Google's shopping service, Froogle, also lets people search for and compare prices on products. (The site, launched in 2003, is still in beta). In addition, Yahoo has beefed up its retail search site in the past two years to allow for comparison shopping.
Shopping search is a key asset for the Web giants because search is often the last link between a consumer and an advertiser. Industry experts estimate that 20 percent of all search queries are commercial in nature.
eBay itself has long been an avid search-engine marketer, buying thousands of keywords to promote its marketplace on Google, Yahoo and Shopping.com. In recent years, the company has also introduced auction-style advertising for eBay sellers so that they may promote their goods within its walled garden.
With Shopping.com, eBay will own a major avenue to funnel traffic back to its online mall, along with the ability to bolster its fee revenue with advertising dollars.
eBay declined to say how the two Web sites might be integrated. But Durzy said it was "fair to say" that eBay was looking into ways to get more eBay auction listings into Shopping.com search results.
"Shopping.com is a complementary platform," Durzy said. "They do certain things very well, and the one group of sellers for whom the platform could be very interesting is those who experiment with new and in-season products, which you can find in any store and in multiple places online. Those are the kinds of items people would be very likely to use a shopping comparison site to find."
eBay said it expects that Shopping.com's Epinions site for consumer reviews will complement its own "community feedback-driven marketplace."
Headquartered in Brisbane, Calif., and with offices in Netanya, Israel and London, Shopping.com has sites for the United States, the United Kingdom and France. The company cited ComScore Media Metrix in claiming about 50 million distinct visitors every month.
The two companies said they expect the deal to close in the third quarter following regulatory approval and a vote by Shopping.com shareholders. Shopping.com, which said it has about $140 million in cash, cash equivalents and marketable securities as of May 31,in October.