However, not all e-commerce companies have seen the same level of success, making it crucial to understand industry trends. This article covers both general mergers and acquisition deal activity and VC investment trends occuring in the e-commerce sector.
Petsmart/Chewy (April 2017) – As mentioned, this has been the largest ever e-commerce transaction to date ($3.35 billion).1 It signifies traditional retailers’ growing interest in the e-commerce model.
Walmart/Jet.com (August 2016) – Walmart acquired Jet.com for $3.30 billion in order to have an online portal where it could sell its major brands.2 This was notable because it showed the pressure Amazon has put on Walmart to embrace the e-commerce model.
Many buyers of e-commerce companies are large, established companies that are seeking to buy out competitors and growth opportunities in their space. These e-commerce buyers vary greatly in the types of products they sell and most have only made a limited number of acquisitions within their individual retail niches.
It can be helpful to break down the e-commerce deal market into different types of buyers and investors to gain a clearer picture of the market.
Total VC investment has been strong in 2017. These have markedly been coming at later points in company’s lifecycle. In 2013, Series C investment and beyond comprised 23% of total deal share. In 2017, that amount has risen to 34%. In terms of the number of startup investment deals, 2017 is projected to see 941, which beats last year’s 796, and puts it close to 2015’s 976.3 The following graph illustrates this point.
Revenue Growth Rate – Faster-growing companies tend to be worth more. Looking at the growth rate over time can be helpful to see how quickly a company is maturing.
It will be exciting to see how e-commerce deals continue to evolve in the coming years. We’d love to hear what you think about the industry in the comments below.
Rani Molla, These are the biggest e-commerce acquisitions of all time Recode (2017), https://www.recode.net/2017/4/21/15346630/top-ecommerce-deals-acquisitions-chart (last visited Dec 15, 2017).
Lisa Tolliver, Ted Polk & Parker Dwyer, Capstone Partners (2017), http://www.capstonellc.com/sites/default/files/Capstone%20Ecommerce%2C%20Internet%20Retailing%20M%26A%20Coverage%20Report_Q3%202017.pdf (last visited Dec 15, 2017).
Is The E-Commerce Slump Finally Over?, CB Insights Research (2017), https://www.cbinsights.com/research/ecommerce-startups-deals-funding-stage/ (last visited Dec 14, 2017).
Kevin Dowd, Amid retail apocalypse, PE pushes into ecommerce PitchBook News (2017), https://pitchbook.com/news/articles/amid-retail-apocalypse-pe-pushes-into-ecommerce (last visited Dec 15, 2017).
E-Commerce Planet: The Most Well-Funded Private E-Commerce Companies In One Map, CB Insights Research (2017), https://www.cbinsights.com/research/top-ecommerce-startups-global-map/ (last visited Dec 14, 2017).
Tough Sell: E-Commerce Exits On A Continued Decline, CB Insights Research (2017), https://www.cbinsights.com/research/e-commerce-merger-acquisition-ipo-trends/ (last visited Dec 14, 2017).
Is Stitch Fix’s IPO The Latest E-Commerce Dud Or Is Its Styling Algorithm A Game-Changer?, CB Insights Research (2017), https://www.cbinsights.com/research/stitchfix-valuation/ (last visited Dec 15, 2017).
Trevor Armstrong contributed to this report.