American Apparel to Partner with eBay

According to press releases from both companies, financially struggling retailer American Apparel will be partnering with online auction giant eBay to offer what is being described as the site’s “first full online designer lifestyle shop.” American Apparel, which was saved from having to file bankruptcy to avoid defaulting on its loans earlier in the year by an investment group led by Canadian yogurt magnate Michael Serruya and private investment firm Lion Capital, is seeking new ways to reach buyers without exposing itself to undue financial risk. If there is one thing eBay has, it is an abundance of buyers and according to the company there are more than 30,000 searches for American Apparel products on eBay each month.

American Apparel’s online store will be accessible through their homepage and the company’s signature (and these days often NSFW) photography will be featured prominently on the site. All orders placed through the eBay store will be filled and shipped by American Apparel. One aspect of this new business model that has already come under criticism is that American Apparel products sold through the site will only be available at standard retail price while most of eBay’s loyal consumers turn to the company looking for deals.

Whether this is a match made in heaven, as American Apparel hopes, or a relationship that is bound to be rocky from the start, as many suggest; it is clear that eBay will be getting the better end of the deal. While this could breath life back into American Apparel’s sinking stock prices and revenue stream most observers are viewing this as eBay testing the waters for a new online business model to be supported by their already ubiquitous name. It is clear from the wording of eBay’s press release that their primary focus in this new relationship with be marketing as the following except suggests: “eBay’s unparalleled market share and marketing abilities, such as targeted email communication, affiliate programs and personalization, will help promote American Apparel to a new audience of devoted eBay shoppers.”

However how devoted those shoppers will be when paying full retail prices has yet to be seen.

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