According to the latest news, retail giant Wal-Mart announced formally last night that it will acquire online retailer Jet.com for approximately US$3 billion in cash, becoming one of the largest M&A transactions in the history of e-commerce. Industry insiders believe that Wal-Mart is expected to challenge Amazon in the e-commerce market by combining Jet.com's patented technology, customer data and e-commerce experience, and relying on its vast supplier relationships, high-quality logistics and purchasing power.
According to the agreement, in addition to the $3 billion in cash purchases, the deal also included Wal-Mart stock valued at $300 million, which will be paid in installments in the future. The transaction is expected to be completed by the end of this year, and the Jet.com brand will continue to be retained after the transaction is completed.
Jet.com was founded by Marc Lore in July last year. The website mainly offers larger discounts in exchange for users to place large orders and pay annual fees. In less than a year, the total website revenue reached US$1 billion and more than 4 million users were shopping. In July 2016, Jet.com’s sales increased by 168% year-on-year.
Sources revealed that before Wal-Mart acquired Jet.com, the latter had raised more than $500 million in venture capital from Alibaba Group, Fidelity Investments, and Goldman Sachs. Jet.com also considers raising 640 million U.S. dollars through a new round of financing, which currently has a market value of approximately 1.6 billion U.S. dollars.
Wal-Mart Group, as a buyer, has been in a predicament recently. As the giant of the traditional retail industry and actually the second largest e-commerce platform in the United States, Wal-Mart's online business growth reached the lowest level in a year in the most recent quarter. According to research firm Internet Retailer, Wal-Mart’s online sales for the whole of 2015 were only 13.7 billion U.S. dollars, which is only 14% of Amazon’s total revenue of 99 billion U.S. dollars.
In this case, Wal-Mart had to make a significant investment in its online business to catch up with Amazon. Its efforts include the recruitment of thousands of online business employees, the establishment of two online sales offices in Silicon Valley, and the establishment of large-scale e-commerce distribution centers. In addition, Walmart also launched a subscription service similar to Amazon's Amazon Prime.
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