In August, news broke that Wal-Mart Stores Inc. was in the middle of negotiations with Jet.com. The $3.3 billiondeal to buy the web retailer is all part of Wal-Mart’s plan to jump-start the growth of its e-commerce operations. The goal? It would seem Wal-Mart is scrambling to catch up with the mighty Amazon.
According to The Wall Street Journal, “The deal is the largest ever purchase of a U.S. e-commerce startup and a sign Wal-Mart Chief Executive Doug McMillon sees the shift to online shopping and the expansion of Amazon.com Inc. as existential threats to the company’s five decades of growth.”
In May, McMillion shared that he had no illusions about the company’spresence on the web. “Growth here is too slow”, he shared. In 2015, Wal-Mart’s online sales were $14 billion, not even 3 percent of the company’s top line. Amazon, on the other hand, reached $100 billion; a revenue increase of about one-fifth. Amazon also passed Wal-Mart in terms of market value last year (it is now 60 percent larger).
In comparison to Amazon, Wal-Mart lags in other areas as well. Wal-Mart’s marketplace has over 10 million items, while Amazon boasts 200 million. Amazon has also been crossing over into Wal-Mart’s territory by expanding its market to fresh food deliveries. While Wal-Mart has attempted to introduce two-day shipping to try to better compete with Amazon, some are saying these efforts have come a little too late.
The changes Wal-Mart has planned shed some light on its recent target, Jet.com. Through its acquisition, Wal-Mart will gain access to a larger group of young, wealthy, urban shoppers. According to Wal-Mart, Jet has been adding 400,000 shoppers monthly.
“Jet has been able to attract some brands we don’t have at Wal-Mart”, says Mr. McMillon.
The question is this: will Wal-Mart, with the help of Jet.com, be able to lure shoppers from Amazon? Many are doubtful. Moody’s lead retail analyst, Charlie O’Shea, says that “catching” Amazon online is an “unrealistic goal”. Only time will tell if Wal-Mart’s changes have the desired effect on their e-commerce operations.
With giants like Amazon dominating the web, how does a startup – like Jet.com – stand a chance? A great way for a business to secure the business funding it needs is to secure an ecommerce merchant account. These accounts – like the high-risk accounts offered by eMerchantBroker.com – are tailored to meet each industry’s needs and challenges. It’s true not every startup will have an offer made to them by a retail giant like Wal-Mart Stores Inc. However, that doesn’t mean you can’t set your business venture up for success with tools like safe, hassle-free payment processing solutions.