Wal-Mart Stores is expected to buy Jet.com at a cost of $3 billion (equivalent to Ksh. 300 billion in Kenya). Direct sources confirmed with the global media houses that the deal is on and it is currently at the final stages. The finalization of the deal has been reported on Recode and Bloomberg since Friday.
In the recent months, we have witnessed the closing of several big acquisition deals. The retail companies are rushing to build their defenses against huge online retailers like Amazon.com.
Jet.com was launched back in 2015 with an aim of wrestling away some market share from Amazon. The company founder, Marc Lore was also the founder of Quidsi which he sold to Amazon for $545 million.
Currently, the brick and mortar stores are fighting the huge online stores for a share of the market through acquisitions. Nowadays clothing and consumer goods are selling like a hot cake at the online stores.
Amazon is posing a great danger to physical stores. This may explain why Unilever bought Dollar Shave Club last month in order to also compete with Amazon.
The investors of jet.com have a lot to gain from the looming sale. They had already invested $800 million to finance the company operations. The major investors include: Bain Capital Ventures, Norwest, NEA, Goldman Sachs and Accel among others. Lore is actually the biggest beneficiary of this acquisition. He owns a 25 percent stake in jet.com. He is expected to make $750 million from this sale to Walmart.
Jet.com has always grown aggressively since its launch in 2005. This happened at a great cost. It is reported by Recode that the company used to spend between $20 million and $25 million every month in order to get its growth.
How did Jet.com Start?
It is reported that jet.com started out by charging membership fees the same way Amazon Prime does. The company has over 54 million prime members based in the United States. The company tried in their efforts to get customers away from Amazon. It is a great strategy. Later Jet.com was forced to ditch the prime membership program and focused on price cutting.
