Dive Brief:
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Hayneedle, the online home furnishings retailer that e-commerce startup Jet acquired earlier this year, will continue its operations after Jet merges with Wal-Mart, the Omaha World-Herald reports.
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Both Jet and Hayneedle will continue to exist as stand-alone units, a Wal-Mart spokesperson said. That means that approximately 400 Hayneedle employees based in Omaha, NE and staffers in Jet's operations in New Jersey and elsewhere will keep their jobs.
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Wal-Mart announced Monday it will buy Jet for $3.3 billion, the biggest deal in U.S. e-commerce startup history. Key Jet executives including co-founder and CEO Marc Lore are slated to remain with the company once Wal-Mart assumes control.
Dive Insight:
Several larger, more traditional retailers of late have moved to acquire e-commerce sites. Hudson’s Bay bought flash-sales site Gilt Groupe for its Saks Fifth Avenue unit, television shopping network QVC bought flash-sales site Zulily last year, and more recently Bed, Bath & Beyond acquired home furnishings e-retailer One Kings Lane.
While such acquisitions provide retailers with another channel to move goods and appeal to another segment of consumers, many onlookers wondered what might become of Hayneedle when the Wal-Mart/Jet deal was first rumored, then confirmed. Wal-Mart spokesperson Randy Hargrove has now assuaged their concerns, telling the World-Herald that “It will be business as usual” for both Jet and Hayneedle.
While Wal-Mart says that Hayneedle will operate as a separate unit, the acquisition provides opportunities for the brick-and-mortar retailer to introduce Hayneedle items into stores down the line. For example, Claude de Jocas, group director at business intelligence and research firm L2, said that Bed Bath & Beyond could ultimately bring One Kings Lane concessions into its stores, presenting merchandise to expand its appeal to a segment of consumers that it doesn’t always attract. And having a brick-and-mortar portal could benefit the online retailer as well.
“Many think that opening a store is a great marketing opportunity. The thing that we have really seen in our research, any time one of these online-only players opens a store, there’s a tangible lift in consumer awareness of the brand, and many startups neglect that,” de Jocas told Retail Dive. “Not only is that true, but these stores can also be profitable, very successful ventures—even in some of the most competitive areas of the world—and I think that’s been a bit of a surprise for some of these founders.”
Wal-Mart has struggled to compete online, with growth stagnating at around 7% and online sales of $14 billion last year, paling in comparison to Amazon's $99 billion retail business.