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M&A Transactions in Global E-Commerce Sector: Q1-2017
M&A Transactions in Global E-Commerce Sector: Q1-2017
M&A Transactions in Global E-Commerce Sector

The global M&A transactions in the first quarter of 2017 in the e-commerce sector, has crossed $1 billion with top e-commerce and brick & mortar players such as Amazon, Alibaba and Walmart acquiring regional and niche e-commerce startups.

Description of Deal Buyer Target Value (US$ million)
Amazon buys Dubai-based Souq.Com Amazon.com Souq.Com Not disclosed
Walmart buys fashion retailer ModCloth Walmart ModCloth Not disclosed
Alibaba, SAIF invests in Paytm E-Commerce Alibaba Paytm E-Commerce 200
Ebates acquires ShopStyle from PopSugar Ebates PopSugar Not disclosed
Walmart acquires Moosejaw Walmart Moosejaw 51
Coty acquires stake in Younique Coty Younique 600
Walmart acquires online retailer ShoeBuy Jet.com Shoebuy.com 70

Table 1: e-commerce acquisitions in Q1-2017

In the first quarter of 2017, Walmart continued to battle against its e-commerce rival Amazon through a series of acquisitions including Shoe Buy, Moose jaw and Mod Cloth. The retail giant reported a solid finish to fiscal year 2017, with total revenues of about $497 billion, and an increase of 3.1%, compared to fiscal year 2016. Notably, the individual acquisitions of Walmart in Q1-2017 are much lower than the $3.3 billion it paid to acquire Jet.com in 2016.

Walmart kicked off the year 2017 with the acquisition of an online shoe retailer ShoeBuy.com, throughWalmart’s subsidiary Jet.com, for $70 million from IAC, thereby strengthening its online footwear business. ShoeBuyretails footwear, clothing and accessories for women, men and kids and carries more than 800 brands. The acquisition of ShoeBuy underlines Walmart’s continued push against Amazon, the owner of online shoe store Zappos, which was acquired by Amazon in the year 2009 for about $850 million. While ShoeBuy isn’t nearly as large as Zappos (considering the revenue), it still gives Wal-Mart a foot in the door to more robust clothing sales.

Apparel is the largest online sales category in the U.S. While Wal-Mart sells a good amount of clothing in its brick-and-mortar stores, it doesn’t crack the Amazon’s online apparel retail.Thus, in order to penetrate more into the vast apparel market, further acquisitionswere made by Wal-Mart. In Feb-2017, Wal-Mart acquired Michigan-based online outdoor clothing and gear retailer Moosejaw for $51 million in cash. The acquisition of Moosejaw has improved Wal-Mart’s competitive standing in the U.S. e-commerce space against its rivals.Teaming with Moosejaw is expected to allow Walmart to sell a complete assortment of apparel, including brands like Patagonia, The North Face, Marmot, and others.

In order to accomplish its goal of catching up with Amazon,Walmart has acquired the assets and operations of online apparel retailer ModCloth for an undisclosed sum, in Mar-2017. ModCloth offers clothing and accessory items, including independent designers, national brands and ModCloth-designed private label apparel. It’s very clear that the massive retailer’s M&A tactics have been very much focused on helping it beef up its e-commerce sales by expanding its online product portfolio and customer base.

Moving on to the fashion and beauty space, the New York-based beauty products maker Coty has acquired 60% stake in privately held online cosmetics retailer Younique for approximately $600 million in cash. Younique and Coty expect to combine Younique’s high growth e-commerce platform with Coty’s extensive manufacturing and supply chain capabilities to accelerate the product offering and geographical expansion of Younique. Younique actively makes use of the social media to sell its cosmetics through individuals, known as ‘presenters’.Younique’s sibling founders, Derek Maxfield and Melanie Huscroft, retain a 40% stake in the online cosmetics retailer, which they will continue to run as a separate business within Coty’s consumer beauty division. The acquisition of Younique by Coty was after it not doing any acquisitions since 2015, when Coty had paid $12.5 billion to acquire Proctor & Gamble’s specialty beauty business.

India’s fast growing e-commerce space, which has been witnessing battle between Flipkart and Amazon, has also seen Alibaba taking more interest to have its presence felt, in Q1-2017. The Chinese e-commerce major along with investment firm SAIF Partners has invested about $200 million in India-based Paytm’s online marketplace. Alibaba’s Singapore unit invested $177 million for about 36% stake and SAIF invested $23 million for 4.66% stake in Paytm E-Commerce.

Also Read: M&A Transaction in Retail and Consumer Sector(Between 1st-july to 30th-Sep,2016)

U.S.-based e-commerce leader Amazon which has been in India for past five years trying to displace India-based e-commerce unicorn Flipkart, has reached an agreement to buy Dubai-based internet retailer Souq.com, in Mar-2017. The transaction details were not disclosed by Amazon, though Reuters and other news agencies expect the deal value to be in the range of $600 to $750 million, much lower than the $1 billion valuation that Souq had in earlier rounds of funding in which it raised $275million from investors including Standard Chartered Bank. Souq.com sells consumer electronics, fashion, household items and other goods, claims to be the largest e-commerce site in the GCC. For Amazon, acquiring Souq.com provides a ready platform to expand quickly in the region with large, young and tech-savvy population.

In Feb-2017, Ebates which connects shoppers and retailers through digital content and provides cash back shopping, has acquired ShopStyle from PopSugar. ShopStyle is a fashion discovery and search platform that partners with brands, retailers, stylists and top bloggers to bring exclusive content and unique style perspectives. Ebates strengthens its position in product discovery space and enhances expertise in fashion vertical through the acquisition.

The competition among the major e-commerce players seems to be neck-to-neck in the Q1-2017. While Walmart tried to catch up with rival Amazon, Amazon’s fight against Flipkart was intensified in India. However, Chinese e-commerce heavyweight Alibaba was getting down having its presence felt in the promising e-commerce space India. Coty also strived to become a global industry leader by being aclear challenger in the fashion and beauty domain. We can expect more interesting acquisitions by established brick & mortar retail in the e-commerce space in the next three quarters of 2017.

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