U.S. Ecommerce After Jet.com and Dollar Shave Club: VC Is Back in Town?


Jason Del Rey, who is reporting on ecommerce for Recode, on the implications of the recent acquisitions of Jet.com by Walmart and Dollar Shave Club by Unilever for U.S. investors and U.S. online retail:

“You’re no longer going to be out on an island doing a deal of great importance,” said Greg Bettinelli, an investor with Upfront Ventures who specializes in e-commerce startups. “People on these boards will look back to what Unilever and Walmart did and say, ‘It’s not just Facebook and Salesforce making these kinds of deals anymore.’”

At the same time, the risk amid the industry jubilation is that shaky e-commerce startups might be lulled into thinking a savior awaits in the form of a struggling brick-and-mortar retailer looking for a digital jolt. Fair-weather investors are also already storming back into the space, asking for meetings with entrepreneurs whose pitches they once dismissed, according to several founders.

Interesting. I actually don’t think those deals, and Jet.com especially, where good signals to the U.S. online retail market. (The first was a big shot at creating something at the same scale like Amazon. The latter had a good shot at going public within the next years and making a real dent in its market. Both exited rather early.) As I wrote when the deal between Jet and Walmart was not yet public but rumored:

For (U.S.) online retailers, Jet.com was/is a ray of hope. Finally, venture capitalists were, at least once, willing to put some serious money behind a new ecommerce player who wants to go against Amazon. Weirdly, Silicon Valley VCs are usually afraid of Amazon and hence don’t invest much in ecommerce.

An early exit of Jet.com to Walmart, although lucrative to its investors, will send the wrong signal to the industry. You can’t build a new stand-alone online retailer going eye to eye with Amazon, people will say. I don’t believe that. The growth of the online retail market and its eventual scope leave room for much more. Even in the U.S. today. Even with Amazon growing like weed.

It is not healthy for pure online players to become departments of big brick-and-mortar retailers. It is not healthy to think this is the only course of action for the industry. Neither is it healthy for the U.S. market that investors are too afraid of Amazon to go into ecommerce.

Will some of them now finance (in their eyes) acquisition candidates for Walmart? Better than nothing, I guess.

Del Ray:

Dollar Shave Club and Jet had another thing in common that makes them, and their acquisitions, unique: super-talented founders on whom the acquiring company is making huge bets.

Yes, as an industry, you probably should not count on a rising demand in acquihires.

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