Wal-Mart Stores Inc and e-commerce startup Jet.com Inc are trying to close a US$3 billion acquisition as soon as today that would require Jet founder Marc Lore to head the retailer’s online division for several years, according to people familiar with the matter.
Lore would stay in that role for more than the two-plus years he spent at Amazon.com Inc, said one of the people, who asked not to be identified because the details are not public.
The deal combines Jet’s proprietary technology, customer data and Lore’s e-commerce know-how with Wal-Mart’s extensive supplier relationships and its US$480 billion revenue stream that can be used to fight Amazon.
Marc Lore is “one of the smartest people in e-commerce” who will bring a new kind of thinking to Wal-Mart to help it transition to digital commerce, Forrester Research Inc analyst Sucharita Mulpuru said.
“Wal-Mart still struggles with things like third party marketplaces which Marc and his team have successfully built,” she said.
In teaming up with the world’s largest retailer, Lore would get deeper pockets and a longer runway than he has ever had to take on Amazon.
Lore, 45, duked it out with Amazon as founder and chief executive officer of Quidsi, best known for Diapers.com, before a protracted price war and tight credit market during the Great Recession forced him to sell to his competitor for US$550 million in 2010.
After working for Amazon as part of that deal, he emerged with Jet last year and a plan to challenge Amazon yet again.
Jet has differentiated itself in e-commerce through “gain sharing,” enticing shoppers to add items to their baskets to reduce the shipping cost of each unit, or to pay with debit cards rather than credit to cut transaction fees and then share the benefits with customers through additional discounts, said Kirthi Kalyanam, director of the Retail Management Institute at Santa Clara University in Santa Clara, California.
The question is whether Wal-Mart’s vast inventory and supplier relationships can be used to sweeten the sales beyond what Hoboken, New Jersey-based Jet has done, such as savings of about US$0.10 to double a toothpaste order, he said.
“The gains with Jet alone are not compelling right now,” Kalyanam said. “If Wal-Mart helps make the gains for shoppers more compelling, it may have some legs. It’s something unique and fits with Wal-Mart’s desire for shoppers to have a large basket at checkout.”
Amazon is changing the way people shop by offering inventory on its Web store larger than any big-box retailer’s and delivery in as little as one hour in many cities. Its US $99-a-year Amazon Prime membership provides free two-day shipping on millions of items, encouraging consumers to shop online and save themselves a trip to the store.
Jet initially offered a similar membership model that cost US$50 a year, looking to undercut Amazon, but quickly canceled the fee and offered free shipping on orders of at least US$35.
It sought to lower costs by matching shoppers with inventory closest to them, tapping retail partners including Wal-Mart. Jet sought to emphasize savings over Amazon’s emphasis on fast delivery.
Wal-Mart’s online sales were about US$14 billion last year.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to