Walmart is snapping up another company to build out its online shopping offerings, as the low-cost retail giant adapts to shifting consumer habits and duels with Amazon.
Walmart (NYSE: [[ticker:WMT]]) and its prized e-commerce subsidiary Jet.com have acquired Boston-based ShoeBuy for about $70 million from IAC. The deal was announced Thursday, but closed on December 30.
Founded in 1999, ShoeBuy was one of the early companies to sell shoes online, along with competitors like Zappos.com, which was acquired in 2009 by Amazon (NASDAQ: [[ticker:AMZN]]) for $1.2 billion. ShoeBuy founder Scott Savitz led the company until its 2006 sale to IAC. Savitz remained involved with ShoeBuy until 2011, according to his LinkedIn profile, and he is now managing partner at Data Point Capital in Boston.
ShoeBuy has grown to more than 200 employees, who will remain based in Boston. ShoeBuy will continue operating as a standalone site that complements Jet’s website, according to a press release. ShoeBuy CEO Mike Sorabella and the rest of the management team will remain with the company, the release said.
Jet—whose website sells a wide assortment of products—said the deal gives it access to an experienced e-commerce player with a large mix of products and “strong industry relationships,” among other benefits. ShoeBuy’s website carries more than 800 brands and over 1 million products, including shoes, clothing, and accessories, according to the press release. The release didn’t share ShoeBuy revenues.
Although Savitz is no longer involved with ShoeBuy, Xconomy reached out to get his thoughts on the deal and what it means for his former company and the retail industry overall.
“There are probably very good synergies with this,” Savitz said in an e-mail. “Jet.com gets access to the amazing representation of brands (and the relationships) Shoebuy.com has, and Shoebuy.com will get even wider distribution and other cost savings by partnering up with an 800-pound gorilla in Jet.com/Walmart.com.”
For Walmart, ShoeBuy adds to its growing mix of e-commerce subsidiaries and technologies. In recent years, Walmart has spent billions on its online shopping strategy, which includes building its own data centers, increasing its online grocery offerings, and acquiring companies.
Walmart’s most significant e-commerce move so far was its purchase of Hoboken, NJ-based Jet in August 2016 for $3.3 billion. The deal was seen as a way for the big box retailer to be more competitive with Amazon, but it was a big bet—Jet’s site had launched just a year earlier.
Now, we’ll see if Jet and smaller acquisitions like ShoeBuy pay off. Walmart’s e-commerce efforts come during a challenging period for the company—its annual sales declined in 2015 for the first time since the retailer went public 45 years earlier. (Full-year financial results for 2016 haven’t been released yet.)
Savitz thinks the ShoeBuy acquisition shows Walmart’s “commitment to the Internet and how people like to shop today,” he said. “I wouldn’t be surprised to see them buy more category leaders as they compete against Amazon and a changing retail environment.”
Savitz is glad the ShoeBuy deal is structured so that his former company “will still enjoy enough independence” and that its employees will remain in Boston.
“When you start these companies you hope they will create significant value for your employees, shareholders, and ultimately acquirers, and be very sustainable, real businesses,” Savitz said. “I couldn’t be prouder that ShoeBuy continues to do all these things and continues to have great impact on Boston … and in shaping Internet retail.”
