The reason for this type of acquisition is to grow their e-commerce
and digital business, which is the growth arm of just about every
retailer in the marketplace. According to the online publication Economist,
“Last year Wal-Mart’s global e-commerce sales increased by 12% to $13.7
billion, compared with a 20% jump to $107 billion of sales at Amazon”.
They need to take steps to close the gap with Amazon, and with Jet.com,
they get an infusion of both technology and talent to help shore up
their e-commerce capability.
The big takeaway for me is not so much the acquisition but the fusion
of old school retail companies with modern day technology companies.
On the surface it seems like a strange marriage. Most retailers are
frugal, with thin margins and a lean staff. They squeeze every penny
out of their business model to lock in profits. Most technology
companies don’t make a profit, and they are not worried about it.
However, the explosive growth in the digital channel in the retail
industry has everyone’s attention, offering real opportunities even for
companies in the grocery business, which is renowned for having razor thin margins.