NEW YORK — Jet.com was born out of a dream of taking on Amazon and its grip on the world of e-commerce. But the online discount retailer may instead be poised for a humbling sale to the biggest traditional store chain around.
Jet.com is in talks to sell itself to Walmart, two people briefed on the matter said Wednesday. The talks are continuing and may not lead to a deal.
A representative for Walmart declined to comment on the talks, which were reported earlier by The Wall Street Journal. A representative for Jet.com declined to comment.
Founded by Marc Lore, an entrepreneur who founded the parent company of Diapers.com and later sold it to Amazon for $550 million, Jet.com has tried to chart a different course in the $350 billion US-commerce market. It attacked Amazon directly, seeking to build a national network of warehouses while offering a similarly broad selection of goods.
But it also sought to undercut Amazon on price, using complex formulas that adjust the cost of items based on factors like the quantity of products bought at once.
The approach may have seemed quixotic, but Lore succeeded in raising more than $500 million from many investors, including venture capital firms like New Enterprise Associates and mutual fund company Fidelity. Jet.com quickly gained a valuation of roughly $1 billion.
Along the way, Jet.com was hailed as a particularly ambitious "unicorn," the once-ballyhooed class of Silicon Valley startups valued at $1 billion or more.
But Jet.com has struggled. It rapidly burned through much of the cash it raised from investors as it expanded its staff and spent millions on marketing. And last year the company dropped its membership fee.
Walmart, in pursuing what would be one of its biggest takeovers, is seeking to reproduce its offline dominance in the online world. The company has pumped millions of dollars into efforts to grow its e-commerce business, like offering more items for sale online and expanding its grocery pickup service into more geographic areas.
Still, Doug McMillon, Walmart's president and chief executive, said in May that progress had been "too slow." Shoppers continue to shop overwhelmingly at Amazon, which accounts for more than half of all dollars spent online.
Walmart recently announced a two-day subscription shipping service for $49, its own version of Amazon's $99 annual Prime membership.
But Jet's model of encouraging bulk buying would complement Walmart in areas where the retailer has lagged, according to Neil Saunders, a retail analyst with Conlumino, a research and consulting firm.
A decade ago, consumers might have been more inclined to stop at Walmart for household items like toilet paper and laundry detergent in "fairly reasonable quantities" and pick up other items while they were there, Saunders said.
"What's happened, though, with these online sites is that people first of all are much more likely to buy in bulk because they can get better deals," he said.
"Once you've done that," Saunders said, "your need to go to a store like Walmart is very much reduced."