EBags agrees to sell itself to Samsonite

eBags, one of Denver’s oldest dot-com companies, has agreed to be acquired by Samsonite International, the travel luggage maker that once employed most of eBags’ co-founders.

Samsonite, which started in Denver in 1910 and is now based in Hong Kong and Luxembourg, said it would pay $105 million for the Greenwood Village-based e-tailer of purses, suitcases and nearly any bag imaginable.

“For the record, I am thrilled for eBags. Thrilled for Samsonite,” said eBags board chairman Jon Nordmark. “And thrilled for all the people I know in the newly combined business.”

The deal, expected to close in the second quarter of this year, pending regulatory approval, echoes a retail industry trend in which big-name brands acquire smaller, ecommerce sites.

Samsonite said in a statement that its purchase of eBags will strengthen its own ecommerce business to sell directly to consumers.

“E-commerce is fast becoming a vital part of our business, and will continue to be central in our strategy moving forward,” said Ramesh Tainwala, Samsonite’s CEO, who called eBags “an excellent complement.”

The retail industry has changed dramatically since eBags launched around 1998. While brick-and-mortar retailers have moved online, Amazon has dominated in many markets and now is testing out brickand-mortar stores. But even today, it’s the large, traditional retailers who continue to struggle, said Don Davis, editor-in-chief of Internet Retailer.

“What we’re seeing is that a lot of big companies that got big before online shopping became an important thing are now looking for e-commerce expertise,” Davis said. “You see Walmart spending $3 billion for Jet.com, Unilever spending a billion dollars for the Dollar Shave Club. … And now Samsonite is buying eBags. These companies realize they have to get good at selling directly to consumers by the web.”

eBags has prided itself on customer service and attention. On its home page, the company touts how many bags it has sold: 28,677,600, as of Friday afternoon. A

year ago, it was at 25 million. The company’s growth has kept it among Internet Retailer’s Top 500 list of the fastest-growing retailers. Last year, it was at No. 169. The 500 merchants reported U.S. web sales of $286.2 billion, or 84 percent of total e-commerce sales during 2015.

“Particularly with this deal and the Unilever deal, you have consumer goods and manufacturers who realize they can’t just rely on Walmart and Best Buy to sell their goods. They need to go directly to consumers, and that’s what eBags is known for,” Davis said.

According to eBags officials, the company has no plans to leave Greenwood Village. eBags would become a wholly-owned subsidiary of Samsonite and keep its name. CEO Mike Edwards will continue to be the head of the company, according to eBags. The company employs 125 people.

Edwards was not available for comment.

eBags was founded in 1998 after Nordmark, then a Samsonite marketing employee, tried to persuade his bosses to start selling bags online. But after the CEO told him no one would ever buy a bag through an email, Nordmark left and convinced Samsonite colleagues Peter Cobb, Frank Steed and Andy Youngs to join him at launching eBags. Eliot Cobb is a fifth co-founder. An early investor was Benchmark Capital, which put in $30 million as the company was starting up in the 1990s.

The company focused on luggage, but after Sept. 11, 2001, business changed dramatically, Cobb said in an earlier interview with The Denver Post.

“People were cocooning and not going out. Our sales were up 40 percent in the two months after 9/11,” Cobb said. “So we focused less on travel and moved into backpacks, purses and everyday bags.”

eBags thrived as an online seller that carried very little inventory, like a typical brick-and-mortar retailer. It partnered with brands with minimal internet presence and, when orders came in, the brands shipped orders to customers directly from their own warehouse. In more recent years, however, eBags began making its own bags, which are some of the top sellers on the site.

While online sales grew, so did competition. And by 2015, the company hired Edwards, who previously had been at Borders Books and Staples. Edwards expanded eBags’ business to travel accessories, international sales and all sorts of new technologies. And in late 2015, Edwards and Cobb were among a group of investors who bought out Benchmark Capital’s stake.

Samsonite started as a trunk manufacturing company in Denver back in 1910, according to Samsonite’s history page. The company expanded into luggage and sold bags worldwide. Over the years, it acquired several luggage brands, including American Tourister in 1993, High Sierra in 2012 and Tumi Holdings last August.

In 2006, the company announced it was leaving Denver and its operations would be consolidated in Mansfield, Mass. A year later, the company was acquired by CVC Capital Partners for $1.1 billion. And in 2011, Samsonite began trading stock publicly and raised $1.25 billion on the Hong Kong exchange.

According to Samsonite, eBags posted net sales of $158.5 million in 2016, a 23.5 percent increase from the prior year’s $128.3 million. The company posted a loss of $400,000 after taxes last year, which had improved from the year-earlier comparable loss of $3.3 million. More than 90 percent of eBags sales last year were in the U.S.