It took a big idea and just two years to ink a multi-billion dollar deal.
Walmart has acquired ecommerce startup Jet.com for $3 billion, the companies announced Monday. As both struggled to compete with ecommerce giant Amazon, it's a move to bolster each of their efforts.
With the deal, Walmart gains more technology and talent — including Jet founder and former Amazon employee Marc Lore — while Jet.com secures more retail partnerships and cash.
There's a lot to unpack in Walmart's 54-year-old history within the retail industry that is worth $23 trillion. Here we breakdown some of the most notable numbers:
The sale price was $3 billion in cash and $300 million in Walmart shares. That's a pretty nice deal for a company that was expected to generate $1 billion in retail sales this year, according to Bloomberg.
It's a quick exit for a two-year-old company and at an impressive price tag.
Josh Elman, a partner at venture capitalist firm Greylock Partners, noted that the deal surpassed Facebook's $1 billion purchase of Instagram in 2012 and $2 billion purchase of Oculus in 2014. Both companies were also two years old at the time of acquisition.
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Jet.com first went live on July 21, 2015. So the deal was signed just over a year after the site was launched.
Lore founded the company in 2014 and did not keep his intentions quiet. In fact, Jet offered 100,000 stock options to whoever got the most users to sign up prior to the official launch.
In January 2015, Lore landed the cover of Bloomberg Businessweek.
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Amazon's revenue for 2015 surpassed $107 billion, up from $89 billion in 2014. About $100 billion was generated from retail revenues while the rest came from sales of Amazon Web Services.
That places the ecommerce-turned-media company as the third-largest retailer in the world, underneath Walmart and Costco.
Yet, the important distinction here is that while Walmart achieved $482 billion in revenue in 2015, only $14 billion came from ecommerce sales. Growth in ecommerce sales fell from 17 percent to just 7 percent over the last year, The Huffington Postreported.
Hence, Marc Lore and Jet.com's entry to focus on Walmart's online business.
Walmart has been working to add more products to its ecommerce business. Currently, Walmart's site stocks 11 million products.
The company said it planned to add 1 million more each month. Even so, the current stock pales in comparison to Amazon's 260 million.
Over its year in operation, Jet was already hosting 12 million products online.
To make a name for itself, Jet attributed a significant portion of its $800 million in venture capital funding on advertising. The company spent $20 to $25 million per month on advertising, Recodereported.
That included billboards, subway signs and online ads.
Jet initially drew a bunch of traffic to its site. At launch in July 2015, it had 6.8 million visits and climbed to 12.2 million the following month. By January, paid search ads contributed more than 50 percent of Jet.com's desktop traffic, according to SimilarWeb.
Credit: SIMILARWEBEcommerce isn't due to overcome brick and mortar sales anytime soon, but the number is climbing.
In 2020, ecommerce will account for 12.8 percent of retail sales, or $3.578 trillion, according to eMarketer. That's up from 7.4 percent in 2015, or $1.671 trillion.
Amazon is predicted to rise to second place in total retail sales, surpassing Kroger, Carrefour and Costco and coming just under Walmart, by 2020. Walmart's total sales are expected to be $609 billion compared to Amazon's $177 billion, according to eMarketer.
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