Wal-Mart buys Jet for $3 billion, hopes to turbo charge e-commerce

Walmart.com and Jet.com will operate as separate sites, with Wal-Mart stores hoping it can find the e-commerce secret sauce to compete with Amazon.
Written by Larry Dignan, Contributor

Wal-Mart said that it will acquire Jet.com for $3 billion in cash in a move the retailing giant hopes will accelerate e-commerce growth that CEO Doug McMillon has already said was too slow.

Meanwhile, Jet CEO Marc Lore and co-founder Mike Hanrahan and Nate Faust also apparently come with the deal. The Walmart and Jet.com sites will remain separate entities.

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Overall, it's clear that Wal-Mart has Amazon envy and needs to scale its e-commerce operations. The Jet management team has had experience battling Amazon through Quidsi and its brands such as Diapers.com.

As for the deal, Wal-Mart said some of the $3 billion for Jet will be paid over time and $300 million of Wal-Mart shares will also be part of the transaction over time.

McMillon said:

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. Our customers will win. It's another jolt of entrepreneurial spirit being injected into Walmart.

And here's the catch:

  • It's unclear whether Wal-Mart will have culture classes and be able to meld its scale with the Lore team, which is expected to bring in "fresh ideas and expertise".
  • Jet offers technology that offers savings and rewards in real-time, and the bet is that supply chain and logistics costs can be cut. That model was the Jet.com dream, but Wal-Mart's sheer scale will complicate matters.
  • Walmart.com and Jet.com rhyme even though the company will focus on everyday low prices, with Jet targeting differentiated customer experiences. Without unification, it's unclear if either site will have what it takes to compete with Amazon.
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