When executives from New Jersey-based e-commerce company Jet.com came to Omaha to check out Hayneedle, they said they liked what they saw.
So much so that the 7-month-old Jet required hardly a couple months’ worth of consideration to decide to buy the 14-year-old Omaha-based company, executives from both organizations told The World-Herald on Friday.
“When we first met, we knew right away it would be an ideal fit for both companies,” said Marc Lore, Jet’s founder, chairman and chief executive.
Jon Barker, president and chief executive of Hayneedle, said the companies’ mutual interest in expanding their respective product offerings while retaining “not only competitive pricing but also exemplary service and experience across all shopping devices” helped seal the deal.
Neither executive would share the terms of the deal.
In the second half of 2015, almost 3 million customers used Jet to purchase millions of dollars’ worth of everyday products like paper towels, over-the-counter medicine and baby wipes and diapers.
Jet formally launched in July 2015 but grew quickly in the second half of the year. The company during the 2015 holiday season was selling close to $2 million in merchandise daily.
Founder Lore said based on those figures, Jet’s “run rate,” or the estimate of what its sales would have been in a full calendar year, topped $500 million.
Hayneedle, meanwhile, each year sells more than $350 million worth of home goods, like decor and indoor and outdoor furniture.
Jet’s acquisition makes Hayneedle a subsidiary that executives said will maintain its independence and identity after the deal closes next week.
All Hayneedle employees — about 400 of whom are in three locations in Omaha, with 100 others spread between fulfillment centers in Ohio and California — will stay put, the companies said.
Barker said his company has handled “several” overtures from companies interested in a deal in the past two years. Discussions with Jet officials began just recently.
Seeing the recent success of e-commerce business Wayfair, which also is in the home furnishings space and went public in late 2014 with a $304.5 million initial public offering, cash-rich Jet may be trying to duplicate that company’s success with its acquisition of Hayneedle.
That’s according to analyst Colin Sebastian, who covers Wayfair for Robert W. Baird & Co., an investment firm.
“I assume it’s also a good way for Jet to acquire more direct merchant and consumer relationships,” Sebastian said.
Whatever the motivations, such a deal is a rarity in Omaha, and even in the broader Midwest region, according to CB Insights. That company tracks venture capital deals including mergers and acquisitions. Its data shows Illinois was the closest state to Nebraska where any e-commerce “exits,” or sales of venture capital-backed companies, happened in 2015.
About three-quarters of 74 such deals were in either California or New York.
Hayneedle’s 400 Omaha employees are spread among its headquarters near 93rd Street and West Dodge Road and local photo studio and call center operations.
All those jobs, plus the ones in Ohio and California, are safe, said Mark Hasebroock, a Hayneedle co-founder and board member.
“I think there’s no doubt it’s all going to stay here,” he said. “The thing Jet really liked about this was the team and the brand — they want to scale it, to grow it, and there’s no indication whatsoever that they’ll evaluate the local operation or move the headquarters.”
The company got its start in Omaha in 2002 when three Omaha entrepreneurs — Doug Nielsen, Julie Mahloch and Hasebroock — saw an opportunity in establishing online stores for very specific products.
Their first store, Hammocks.com, got its start in a Seattle llama farmer’s back shed.
“The original website was tough to navigate and none of us at the time really understood the power of Google AdWords, which had just started coming on the scene,” Hasebroock said. “We redid the site, bought some keywords, and sold about $600 worth of hammocks the first day. The next day, we did almost $2,000.”
The company grew to about 400 total niche stores before rolling them all under the singular Hayneedle brand in 2009.
Co-founder Nielsen, whom Barker replaced as president and chief executive in mid-2013, said Friday he is proud to see the company and its employees move to the next level.
“We started building Hayneedle 14 years ago with a small team here in Omaha and we really created an incredible platform,” Nielsen said. “It’s a great milestone for the company.”
Current Hayneedle chief Barker said the present leadership team will stay in place.
“Hayneedle will continue to operate independently as a subsidiary of Jet,” Barker said. “We will retain our identity, and the relationship with Jet will provide us opportunities to grow faster than we have in the past. There are no plans to move from Omaha.”
Jet has about 300 employees at its Hoboken, New Jersey, headquarters, in addition to more than 400 at a call center in Salt Lake City and about 500 more at warehouses in Nevada, Kansas and New Jersey.
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