Wal-Mart and Kmart will both buy out the minority partners in their online operations.
In a burgeoning bricks and clicks world, the two largest US discount retailers have decided to buy out their respective venture capital partners and take more control of their online operations. Kmart has completed its plans, announced in May, to purchase the 40% of BlueLight.com it did not already own, ending the eTailer’s independent status. Wal-Mart followed suit, acquiring the minority interest in Walmart.com held by Accel Partners, the Silicon Valley-based venture capital firm that helped launch the revised site last November.
Wal-Mart said on Monday that it had decided to buy Accel out to establish an even deeper integration between our online business and the operations of our Wal-Mart stores. Now, the company says, it is a different world than it was 18 months ago and as our vision matured, we realized we have a core customer that needs to be served by one company, but who can choose across a range of formats that need to be integrated.
When Wal-Mart.com and Bluelight.com were set up 18 months ago, several retailers had hoped to spin off their online arms to take advantage of investor appetite for Internet-related stocks. However, the dotcom collapse and dire news from online grocers HomeRuns.com and Webvan has led most retailers to rethink their online/offline strategies. In March, Staples withdrew a planned IPO for its eTail arm, Staples.com, announcing plans to integrate the online unit into Direct, its catalog and business operation.
The decision to clip the wings of online operations will give Kmart and Wal-Mart the ability to share resources and present a united front to consumers shopping through multiple channels. However, although integration between online and offline may be the wave of the future, their respective online operations must have the necessary autonomy to successfully navigate through the unsure waters of eCommerce.
