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How Walmart Is Eyeing Silicon Valley

NEW YORK (TheStreet) - Walmart (WMT - Get Report) continues to up its game against Amazon (AMZN - Get Report) for e-commerce dominance, the world's largest retailer on Tuesday announced its latest acquisition, Adchemy.

Walmart says it's building an Internet tech company within the world's largest retailer. The company announced the acquisition of the product search and e-commerce technology business Adchemy in a blog post. Typing in Adchemy's web address redirects you to the @WalmartLabs blog. Adchemy, founded in 2004 in Foster City, Calif., has "built an impressive team that will help Walmart transform the shopping experience for millions of shoppers each week," according to a May 5 blog post. "This latest acquisition continues our quest to build best-in-class e-commerce capabilities in-house. We have been hiring highly-talented teams organically and are augmenting that by acquiring talent to build our own technologies that can scale with our global business."

Walmart's online sales growth surpassed Amazon's for the first time as global Internet sales rose by 30% to $10 billion for the fiscal 2013 year, which ended on Jan. 31. Amazon's U.S. sales growth, in comparison, rose 20% for the year ended Dec. 31, according to The Wall Street Journal, citing trade publication Internet Retailer.

Of course Amazon's total sales are far above Walmart's e-commerce sales, coming in at $67.8 billion last year. Last year, Amazon sold more than its 10 biggest competitors combined including Apple (AAPL), Staples (SPLS) and Walmart, the Journal says.

Adchemy is Walmart's twelfth e-commerce-related acquisition in three years. The company adds 60 employees to Walmart's 2,100, however the company's founder, Murthy Nukala, will not be joining Walmart. Nukala told The Journal that after "a number of years in the entrepreneur saddle, I just needed time to recover and recuperate."

According to The Journal, Walmart has spent roughly $500 million into e-commerce investments last year, which included opening three online fulfillment centers in Texas, Pennsylvania and Brazil. It has also hired 1,000 employees in Silicon Valley. The company is also testing same-day delivery service as well as online grocery ordering in certain markets. Last week, it expanded its online products to include car insurance.

Still, online sales were just 2% of Walmart's total revenue in 2013.

Walmart's head of e-commerce Neil Ashe predicted in January that the company would be able to match Amazon's offerings and shipping times within two years. Walmart is also looking to e-commerce to grab market share in countries where it doesn't have stores.

"I fully expect us to be serving countries through just e-commerce in the future," Ashe told The Journal.

--Written by Laurie Kulikowski in New York.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.


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