Walmart Buys Jet.com For $3.3B Cash to Fight Amazon

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Comfirmed! Walmart Buys Jet.com

On a mission to boost its e-commerce operations, Walmart has officially acquired Jet.com for $3 billion cash.

Walmart CEO Doug McMillon said in a statement that the acquisition is a smart move for Walmart’s rapid ascent in the world of digital commerce.

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.

Though the US retailer is not vocal about it, the deal will help Walmart compete with its fiercest online rival, Amazon.

A recent Wall Street Journal report says Wal-Mart is one of the biggest U.S. e-commerce players, but has struggled to keep pace with Amazon. Disparities in sales showed Wal-Mart’s e-commerce sales increased just 7% in the most recent quarter, while Amazon grew 31%.

Financial analysts believed the deal could pave the way for Walmart to dominate the e-commerce industry.

The deal is dubbed the largest-ever purchase of a U.S. e-commerce startup.

Why buy Jet.com?

Plummeting online sales growth has hit Walmart for five consecutive quarters. The US retail giant believes the acquisition will bring “fresh ideas and expertise, as well as an attractive brand with proven appeal, especially for millennials.”

Simeon Gutman, an analyst at Morgan Stanley, said Walmart and Jet.com will both benefit from the deal as well.

“A Wal-Mart and Jet.com tie-up could firmly make the e-commerce battle a two horse race,” Simeon Gutman said.

He added that while Wal-Mart could benefit from Jet’s supply chain, talent and technology expertise, the two companies operate with different models.

Part of the Deal

A Walmart Billboard.
A Walmart Billboard.

According to Wal-Mart, the transaction includes about $3 billion in cash and $300 million of Wal-Mart shares. This will be be paid over time and it is slated to close later this year.

Still, the company will continue to operate both Jet.com and Walmart.com as separate websites.

“Walmart.com [will focus] on delivering the company’s everyday low price strategy, while Jet will continue to provide a unique and differentiated customer experience with curated assortment,” according to the release.

Jet’s founder Marc Lore is set to join Wal-Mart as CEO of e-commerce and be responsible for both Walmart.com and Jet.com.

Mina Fabulous follows the news, especially what is going on in the US State Department. Mina turns State Department waffle into plain English. Mina Fabulous is the pen name of Carmen Avalino, the NewsBlaze production editor. When she isn’t preparing stories for NewsBlaze writers, she writes stories, but to separate her editing and writing identities, she uses the name given by her family and friends.