Wal-Mart to acquire Jet.com

The $3.3 billion deal will help the chain fight Amazon

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Bloomberg News

Wal-Mart Stores agreed to buy e-commerce start-up Jet.com for about $3.3 billion, giving the world’s largest retailer the resources for a stronger shopping website to compete with market leader Amazon.com.

The deal includes $3 billion in cash and $300 million in shares that will be paid over time, the world’s largest retailer said Monday in a statement.

Acquiring Jet.com of Hoboken, N.J., which achieved a $1 billion gross merchandise run rate in a little more than a year, gives Bentonville, Ark.-based Wal-Mart a website that processes an average of 25,000 orders a day and is adding 400,000 shoppers monthly.

The move is Wal-Mart’s biggest attempt yet to chase down Amazon, which has dominated e-commerce in much the same way that Wal-Mart has ruled brick-and-mortar retail. Wal-Mart already had spent billions expanding its online operation, including hiring thousands of workers, opening two offices in Silicon Valley, and building large e-commerce distribution centers.

It also started an annual subscription service similar to Amazon Prime, at half the price, but still trails the e-commerce behemoth in online sales.

“Wal-Mart has definitely put its stake in the ground saying, ‘We’re going to be winning in e-commerce,’” said Joseph Feldman, an analyst at Telsey Advisory Group. “Amazon should be concerned about what Wal-Mart is doing.”

Jet.com has distinguished itself in e-commerce through “gain sharing” — luring buyers to add items to their orders to reduce shipping costs, and to pay with debit instead of credit cards to reduce transaction fees.

Traditional store-based mass retailers such as Wal-Mart, Target Corp. and Costco Wholesale Corp. have been struggling to fend off Amazon’s momentum in online shopping.

The deal gives Wal-Mart control over Jet.com’s proprietary technology and its customer database.

Wal-Mart’s online sales were about $14 billion last year, 14 percent of Amazon’s product and service revenues of $99 billion. Wal-Mart CEO Doug McMillon said last month that the company’s online operation has taken too long to grow.

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