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Wal-Mart Stores Inc. is in talks to acquire Hoboken, N.J.-based e-commerce retailer Jet.com Inc., according to a report in The Wall Street Journal. Although the amount that the Bentonville, Ark.-based mega-retailer plans to pay is unknown, a person familiar with the matter speculated that Jet.com could be worth up to $3 billion.
Founded and operated by Diapers.com creator Marc Lore, Jet challenges Seattle-based e-commerce behemoth Amazon.com via lower prices based on a formula that takes basket size and the merchandise’s proximity to buyers into account. Since its July 2015 introduction, the e-commerce company has raised more than $500 million in capital from venture capital firms.
Purchasing Jet could give Walmart a strong e-commerce boost and help it better compete against Amazon, which it sees as a significant threat. Walmart already has said that it plans to invest $2 billion into its two-day subscription-based shipping service, ShippingPass, which is similar to Amazon’s Prime two-day shipping service, charging half of Prime’s annual fee but offering fewer amenities. Additionally, it has taken several swipes at the e-commerce giant, the most recent taking place during Amazon’s biggest day of the year, Prime Day, which offers deals similar to those of Black Friday. Walmart offered a similar promotion to Prime Day’s free 30-day Prime membership while featuring similar product deals as those Amazon offered during this year's Prime Day, which took place July 12.
If the Jet deal takes place, Walmart would own the e-commerce provider's sophisticated pricing software, as well as warehouses and customer data. It also would obtain a brand that could appeal to higher-income shoppers, something it has struggled to do: Amazon shoppers’ mean annual household income is $68,000, $10,000 more than that of Walmart patrons.