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Business

Wal-Mart targets Amazon with talks to buy Jet.com

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Business

Wal-Mart targets Amazon with talks to buy Jet.com

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COMING UP:Wal-Mart targets Amazon with talks to buy Jet.com

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00:00:00
>> Walmart looking to make a major play to take on Amazon. The world's biggest retailer reportedly in talks to buy discount e-commerce site jet.com in a deal that could be valued as high as $3 billion. Reuters mergers and acquisitions reporter Lauren Hirsch says it may be a better option for Jet than going public.
00:00:18
>> A lot of these VC-started consumer facing companies had a lot of hype and a lot of fanfare, and high valuations. The IPO market has been rough, and a lot of them who were thinking about IPOing probably no longer can. And I think a lot of them are actually kinda beginning to face the reality of, they're not super profitable, and looking for a nice landing.
00:00:40
>> A deal would also give a boost to Walmart, which has been struggling to keep up in the online business. Web sales growing at the slowest pace in a year last quarter. Meanwhile, Amazon saw it's Q2 revenue rise by more than 30%. Jet, started a year ago by diapers.com founder Marc Lore, was considered a formidable competitor to Amazon, raising more than $500 million in venture capitol.
00:01:03
The company hoped to challenge the online behemoth by offering lower prices in exchange for customers placing large orders and paying an annual fee. But according to the Wall Street Journal, which first reported talks of an acquisition, it would need billions more in funding to adequately supply it's network.
00:01:18
>> One of the things that Amazon is extraordinary at is having a very large and efficient distribution network, and that takes money. It's an expensive battle to fight, not only on the pricing front, but also on the distribution front. How do you have enough centers shipping at such a way that you are able to please your customers in a timely and effective manner?
00:01:42
But also be fighting against the distribution giant that Amazon has become.>> A deal with Walmart would come with a bit of irony. In 2010, Lore sold his previous company for $540 million to Amazon.