Aug 3, 2016
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Wal-Mart reportedly in talks to buy online retailer Jet.com

Aug 3, 2016

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 Wall Street Journal reported on Wednesday.

Jet.com could be worth as much as $3 billion, the Journal said, citing people familiar with the matter.


Wal-Mart spokesman Greg Hitt declined to comment 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.

While Wal-Mart has not said 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.

Wal-Mart shares closed 0.3 percent lower at $72.94 on the New York Stock Exchange.

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