For a small or mid-sized retailer to add an eCommerce platform is a matter of making a capex adjustment or a plea to shareholders to extend your line of credit. New technology is perpetually better and cheaper, so what do the major players do when they want to roll out a full national eComm solution?
They buy, and that’s exactly what Kroger, a US supermarket giant has purchased online retailer Vitacost.com for $280 million USD. With over 45,000 products the Vitacost.com website provides a perfect platform for Krogers to hit the internet highway with a the pedal down. What is particularly brilliant about this play is flexibility to replicate the technology platform from Vitacost.com while swapping the inventory and website content – all the while taking advantage of the infrastructure and brand of the Vitacost.com site.
In the future, we are likely to see acquisitions and partnerships like this will provide extensive benefits to companies that can seamlessly expand their market by using existing online retailers as literal templates for their stores. Unlike other traditional partnerships, there is no necessity for the companies to be in complementary industries as the value is derived from the technology and logistic infrastructure – a cleaver way to maximise synergies in a growth acquisition.
Do you think we’ll see more technology partnerships with companies from unrelated industries in the future?