NEW YORK: Wal-Mart Stores Inc, vying to better challenge Amazon.com Inc, will pay about $3 billion for internet retailer Jet.com and its innovative pricing software in the largest-ever deal for an e-commerce startup.
The deal disclosed on Monday follows a five-year e-commerce acquisition spree in which Wal-Mart, the world’s biggest traditional retailer, has already bought 15 startups, seeking the talent and technology to make it a dominant player online and narrow the massive gap with market leader Amazon.
Wal-Mart’s online division has underperformed against Amazon, posting its slowest growth in a year in the first quarter as it struggled to gain traction with consumers.
Jet.com was launched by internet entrepreneur Marc Lore in July 2015 and includes software that can offer a customer lower prices as they add items to their shopping cart. Wal-Mart has said it would integrate that software into its main website while keeping Jet.com as a separate entity. “One of the things we really like (about Jet) is that the customer is even more in-charge of the price that they pay,” CEO Doug McMillon said.
McMillon said Wal-Mart will take time in getting the technology and design components from Jet and that they will grow both brands separately in the short-term. “Over time, piece-by-piece, we will end up running a business that is simpler and not completely independent.”
{{/usCountry}}McMillon said Wal-Mart will take time in getting the technology and design components from Jet and that they will grow both brands separately in the short-term. “Over time, piece-by-piece, we will end up running a business that is simpler and not completely independent.”
{{/usCountry}}McMillon said Lore would run its new US e-commerce business. Lore had co-founded Quidsi, the owner of sites like Diapers.com and Soap.com, which was sold to Amazon. “Marc’s e-commerce experience and success are obviously attractive,” McMillon said.
Wal-Mart’s current head of global e-commerce Neil Ashe will leave at the end of the financial year.
The decision to run Jet as an independent website is a good step because it can stay focused on growth, but the price Wal-Mart paid is high, UBS retail analyst Michael Lasser said.