Wal-Mart buying Jet.com to lift online sales, battle Amazon

Mon Aug 8, 2016 5:17pm EDT
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By Nandita Bose

(Reuters) - 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, especially millennials.

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," Chief Executive Doug McMillon said on a media call.

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."

McMillon said Lore would run its new U.S. e-commerce business. Lore had cofounded Quidsi, the owner of sites like Diapers.com and Soap.com, which was sold to Amazon.   Continued...

A person walks outside a Wal-Mart store in Mexico City January 11, 2013. REUTERS/Edgard Garrido/File Photo