Clothes took over as the top-selling category online in the US, and Amazon is cornering the market. Owner of sites such as Zappos, it’s set to become the largest apparel retailer in the US in 2017. Given that its apparel margins are higher than most other categories, according to analysts, that bodes well for future profits.
Jet.com, the Walmart-owned, rapidly growing competitor, isn’t daunted. The company announced Jan. 5 that it has acquired ShoeBuy.com, a Zappos rival with more than 800 brands and a product assortment that also includes clothes and accessories. The $70 million deal closed at the end of 2016.
The move lets Jet quickly establish a presence in that valuable online market for shoes and apparel, even if it won’t dethrone Amazon anytime soon. ShoeBuy will continue to operate as a standalone site, according to Walmart’s press release, and brands will have the option to sell through Jet directly, giving it a potentially profitable foothold in a high-margin space.
And Jet gets those 800 brand relationships. Marc Lore, Jet’s cofounder, told Recode it’s a safe bet that Jet and Walmart will look for other acquisitions of this sort “in the categories where they are long-tail, high-margin products and harder-to-crack brands.”
The $70 million price tag looks low, given ShoeBuy’s estimated revenue of $315 million in 2013, suggesting sales are down or the company isn’t very profitable. But Lore believes Walmart’s relationships and logistics operations can give ShoeBuy’s business a boost, helping it to grow more valuable despite a market filled with competitors.
An earlier version of this article misidentified Marc Lore as ShoeBuy’s cofounder instead of Jet’s cofounder.