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Speculation that Walmart is in Talks to Buy Online Retailer Jet.com

Wal-Mart Stores Inc. is in talks to buy online discount retailer Jet.com Inc., according to people familiar with the matter, in what would mark a disappointing end for one of the most ambitious challengers to Amazon.

As reported by Reuters, Wal-Mart Stores Inc is in talks to buy Jet.com, a year-old online rival, as part of a multibillion-dollar revamp of its e-commerce division aimed at boosting online sales growth.

The talks were reported by the Wall Street Journal today, which said Jet.com could be worth as much as $3 billion, citing people familiar with the matter.

Wal-Mart spokesman Greg Hitt declined to comment on the report and Jet could not be immediately reached for comment.

The world’s largest retailer is playing catch up with Amazon.com Inc on distribution and technology. The acquisition could give it access to Jet.com’s innovative pricing software, its network of warehouses and customer data.

For the past five years Wal-Mart has been on an acquisition spree, buying 15 startups in an attempt to bring in the talent and technology needed to drive e-commerce growth. That includes a social data analysis startup that became its core Silicon Valley technology arm, @WalmartLabs.

According to the Wall Street Journal, Wal-Mart Stores Inc. is in talks to buy online discount retailer Jet.com Inc., according to people familiar with the matter, in what would mark a disappointing end for one of the most ambitious challengers to Amazon.

For Jet, a takeover by an old-line retailer would demonstrate the challenges of attempting to go it alone in the hypercompetitive e-commerce market. The company has sought to underprice Amazon with a vast marketplace that would require billions of dollars in funding and a plan to rely more on suppliers than warehouse inventory.

It isn’t clear how much Wal-Mart would pay, but a person familiar with the matter said Jet could be valued at up to $3 billion in private markets.


While Wal-Mart does not say what it spent on those acquisitions, it has disclosed a total of $3.1 billion for e-commerce and digital projects, such as its platform and new warehouses, in the four fiscal years to January 2017.

Wal-Mart acquired a majority stake in Chinese e-commerce firm Yihaodian in 2012 but sold it in June to JD.com Inc, which is China’s second-largest e-commerce company.

Despite its investments, Wal-Mart has not projected when its online business might turn a profit and its goal of growing by 20 to 30 percent a year may be tough to achieve.

Wal-Mart’s online business has struggled and posted its slowest growth in a year in the latest quarter. Its online sales were $13.7 billion in 2015, according to research firm Internet Retailer.

Wal-Mart said recently that all the changes brought on by the e-commerce reboot, including installing a new technology platform and building new warehouses, contributed to its recent slowdown in growth.

A July 2015 survey by consulting firm Kantar Retail showed the extent to which Amazon had eaten into Wal-Mart’s customer base. The survey found that 48 percent of shoppers at Wal-Mart Supercenters were placing orders weekly or monthly on Amazon.com, double the percentage shopping at that frequency on Wal-Mart’s own site.

Acquiring Jet could help Wal-Mart in establishing a bigger presence online, analysts said. The startup was launched in July 2015 and has raised more than $500 million in capital from venture capital firms.

Jet’s initial strategy was to offer large up-front discounts and the lowest prices on items based on a unique pricing formula that took into account factors like basket size, for an annual $50 fee. But three months after launch, Jet changed strategy and eliminated its subscription model.

Related: What Does Amazon’s E-Commerce Domination Mean for Logistics Service Providers?
What Does Amazon’s E-Commerce Domination Mean for Logistics Service Providers?


Article Topics
News   Business   Mergers & Acquisitions   Other   Retail   Walmart   All topics


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