Why Walmart Bought Jet.com for $3.3b, In Walmart’s Own Words

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The acquisition of Jet.com by Walmart is official. Walmart’s PR release:

Wal-Mart Stores, Inc. and Jet.com, Inc. today announced they have entered into a definitive agreement for Walmart to acquire Jet for approximately $3 billion in cash, a portion of which will be paid over time. Additionally, $300 million of Walmart shares will be paid over time as part of the transaction.

​Walmart put forth some numbers on why Jet.com is a good fit in the companies eyes:

Among other things, Jet has:

  • Demonstrated ability to scale with speed, reaching $1 billion in run-rate Gross Merchandise Value (GMV) and offering 12 million SKUs in its first year.
  • A growing customer base of urban and millennial customers with more than 400,000 new shoppers added monthly and an average of 25,000 daily processed orders.
  • Best-in-class technology that rewards customers in real time with savings on items that are bought and shipped together, thereby reducing the supply-chain and logistics costs often buried in the price of goods.
  • A select group of more than 2,400 retailer and brand partners tailored to create an attractive and distinctive assortment for consumers.

​The following paragraph unintentionally shows off the missing complementarity between the two price focused businesses:

Walmart and Jet will maintain distinct brands, with Walmart.com focusing on delivering the company’s Everyday Low Price strategy, while Jet will continue to provide a unique and differentiated customer experience with curated assortment. Walmart and Jet will leverage innovative technology solutions from both companies to develop new offerings to help customers save time and money.

​Time will tell how the marriage between Jet.com and Walmart will fare. The WSJ on Jet CEO Marc Lore’s new position at Walmart

Mr. Lore will take on a senior leadership position on the e-commerce side of Wal-Mart following the transaction, a person familiar with the situation said. Wal-Mart’s top online executive, Neil Ashe, is expected to depart, this person said.

​With Walmart.com and Jet.com as siblings having to share executives between them, maybe there is now room for Jet.com to become something more than a discount shop?

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6 comments

  1. I think the primary reason they bought Jet was for new ideas – which is expensive and will likely not pay off. Also they overpaid – there was probably a total of zero potential buyers for Jet other than Walmart.

    John
    http://Www.techgistics.net

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