Walmart has raised the stakes in its growing rivalry with Amazon, after it confirmed that it bought online startup Jet.com for $3.3bn. The deal, which includes $3bn in cash and $300m in stock, is part of Walmart’s drive to boost its stagnating online sales even as Amazon continues to grow rapidly.
Jet.com was launched in July 2015 as an alternative to regular online retail sites. It passes on price savings to customers by encouraging them to buy in bulk, and promotes items that can be shipped together from nearby vendors. The company generated $1bn in gross merchandise value (GMV) in its first year and currently averages 25,000 orders daily.
Walmart said it will retain the Jet brand, while using the latter’s technology to bundle together shopping items bring down logistics costs. Meanwhile, Walmart.com will continue to focus on its EDLP strategy.
More interestingly, Marc Lore, the CEO and co-founder of Jet, will now handle both Jet and Walmart’s online operations, taking over from incumbent Neil Ashe. The move was described as “a natural transition.” Lore has a strong history in founding successful start-ups, having earlier launched Quidsi, Diapers.com, Soap.com, and Wag.com.
Doug McMillon, CEO of Walmart, noted: “Walmart.com will grow faster, the seamless shopping experience we’re pursuing will happen quicker, and we’ll enable the Jet brand to be even more successful in a shorter period of time”.
Lore added: “The combination of Walmart’s retail expertise, purchasing scale, sourcing capabilities, distribution footprint, and digital assets – together with the team, technology and business we have built here at Jet – will allow us to deliver more value to customers.”