EBay Drops $80M On Hunch

Out to read consumers’ minds, eBay just acquired recommendation engine Hunch for a reported $80 million.

Per the deal -- first reported by Michael Arrington on his Uncrunched blog -- Hunch’s recommendation technology is expected to be used by eBay to revamp its own ecommerce recommendations. One of Hunch’s co-founders, Chris Dixon has even been pegged tp take over eBay’s existing 50-person recommendations team, and start a new office in New York.

“That New York office will eventually grow to some 200 employees, I’m told, who’ll focus on recommendations,” Arrington reports. “But the team will also analyze lots of eBay data, and perhaps productize some of it or otherwise release it.”

“Although Hunch and eBay don't look like a perfect match at first glance, it appears that the online auction site has no desire to use Hunch in its current form,” writes CNet. “Instead, eBay said today, it will use Hunch's technology to improve its own recommendations across its site.”

“I think the purchase could improve eBay in a number of ways,” according to GigaOm’s Ryan Kim. “For one thing, it could help the retailer better compete with Amazon, and it keeps Hunch out of the hands of its rival, which has been well regarded for its ability to recommend products to users based on their purchase history and preferences.”

EBay launched its own recommendations last year to help suggest items based on past searches, but, as Kim notes, “It clearly has a long way to go in matching Amazon, which moved ahead of eBay in sales last year.”

Founded in 2008, the New York-based Hunch has already raised nearly $20 million in funding. Notes Arrington: “In mid-2010, there were whispers that Google was taking a long look at the company as well, although I haven’t heard anything to suggest they were bidding against eBay this time around.”

As Reuters reminds us, “This is the latest in a string of acquisitions by eBay as it tries to revive its online marketplace, which has lost market share in recent years to Amazon.com.”

 

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