According to reports by The Wall Street Journal, Wal-Mart (NYSE:WMT) is close to acquiring privately-held online retailer Jet.com, a deal worth potentially as much as $3 billion.
Many in the e-commerce industry consider Jet one of Amazon’s chief rivals even after only being around for a little over a year. Jet regularly undercuts Amazon, promising its customers big savings in exchange for paying a yearly membership fee. Such a model encourages customers to do much of their shopping at the same destination. Think of it as an online version of Costco.
Wal-Mart has been trying to chip away at Amazon’s seemingly insurmountable lead in e-commerce for years now, efforts that have been met with mixed results. The company did do approximately $14 billion in online sales in 2015, but growth wasn’t nearly as good as it was in
years prior.
An acquisition of Jet would not only help Wal-Mart grow its online business’s top line, but it would also expose the company to a whole new set of customers. Remember, Wal-Mart has experience in a membership fee business through its chain of Sam’s Club wholesale outlets.
It’s also likely Wal-Mart can use its mighty distribution centers to lower Jet’s cost of merchandise, which is quite important to any retailer’s bottom line.
Shares of Wal-Mart fell $0.43 in trading on Wednesday, down 0.6% to $72.70 per share. The stock’s 52-week range is between $56.30 and $74.35.
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