Both Recode and Bloomberg are reporting that the deal between Walmart and Jet.com will most likely be announced today and, more importantly, that one of the main reasons for Walmart to buy Jet.com was to get Marc Lore and team on board to run Walmart’s ecommerce side of things. (That is certainly one Jet.com deal without a discount. Walmart should try to add a second Jet.com to its basket.)
Wal-Mart Stores Inc. and e-commerce startup Jet.com Inc. are trying to close a $3 billion acquisition as soon as Monday that will require Jet founder Marc Lore to head the retailer’s online division for several years, according to people familiar with the matter.
Some senior Jet executives, including co-founder and CEO Marc Lore, will have incentive bonuses on top of that. (…)
Lore will stay on and run Walmart.com as well as Jet.com, two sources said. It seems likely that he will report to McMillon, the CEO.
Walmart’s current global e-commerce chief, Neil Ashe, will eventually depart after a transitional period, these people said. He joined Walmart in 2012 after a three-year stint at CBS Interactive.
Jet.com is not that big yet. Recode:
Jet does not disclose revenue numbers, but my back-of-the envelope math suggests the company is on pace to do no more than around $500 million in revenue over the next year. An acquisition price that is six times a company’s revenue is mostly unheard of in e-commerce, especially for a company that is nowhere near profitable.
Lore and team are very good at operations, no doubt. Diapers.com was an early manifestation of this, and Jet.com is certainly not unimpressive. But both Diapers.com and Jet.com are missing out on the strategic part. Operations alone are not enough. (This is why both Diapers and Jet.com were/are concentrating on price.)
Is Walmart looking for an operations team for its ecommerce efforts? Combining a seasoned team with Walmarts ressources, and a separate online entity with Jet.com, will move the needle for Walmart. But it will be no threat to Amazon.
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