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E-commerce

Is Walmart buying Jet.com?

Walmart is reportedly in talks to acquire Amazon rival, Jet.com, according to the Wall Street Journal.

The one-year-old online retailer, founded by Marc Lore, has attracted more than $500 million in capital from investors and, with a focus on discount household essentials, is seen as a major challenger to Amazon.

Neil Saunders, CEO of retail research agency Conlumino, said Walmart’s interest in Jet.com should come as no surprise given the company’s desire to grow its online segment.

“For Jet the logic is equally compelling: the company, while successful, struggles to compete with the buying power of larger rivals like Amazon, something that is detrimental in a market where price matters,” Saunders said.

Shoppers looking for bargains on household staples items have helped online sites like Jet, Amazon and Boxed grow by 71 per cent over the past two years, Saunders said.

“While Walmart does have an e-commerce offer, it is somewhat jumbled and unfocused which makes it hard for the company to compete with the likes of Amazon in specific areas like household essentials. To an extent Jet remedies this and would give Walmart a much more focused and powerful offering and platform with which to compete against Amazon,” Saunders said.

“There is no doubt that Walmart would pay a premium for Jet and the acquisition will not come cheaply. However, the deal would provide Walmart with immediate access to a rapidly growing part of the market at a time when its own e-commerce growth is disappointingly slow. Even so, on the digital front Walmart still has much work to do before it catches up to the ever growing behemoth that is Amazon.”

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