Wal-Mart buying Jet.com for $3 billion
Wal-Mart Stores announced it will acquire retail start-up — and would-be Amazon rival — Jet.com for approximately $3 billion in cash. Additionally, $300 million of Walmart shares will be paid over time as part of the transaction.
The deal will go a long way to helping Walmart expand its e-commerce growth and customer reach, and also give it more firing power as it competes with Amazon. And Jet.com’s popularity with millennials will help the discounter attract a younger, higher-income customer.
“We’re looking for ways to lower prices, broaden our assortment and offer the simplest, easiest shopping experience because that’s what our customers want,” said Doug McMillon, president and CEO, Wal-Mart Stores, Inc. “We believe the acquisition of Jet accelerates our progress across these priorities. 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.”
Launched in 2015, Jet.com was co-founded by Mike Hanrahan, Nate Faust and Marc Lore, who serves as its CEO. Among other things, Lore previously co-founded and led Quidsi, the parent company of e-commerce sites Diapers.com, Soap.com and Wag.com.
Jet.com says it has more than 400,000 new shoppers added monthly, with an average of 25,000 daily processed orders. It features some 12 million SKUs, and counts more than 2,400 retailer and brand “partners.” The company uses a proprietary, real-time pricing algorithm to find the lowest possible price on each item from its network of retail partners, and offers free two-to-five day shipping for orders more than $35.
“We started Jet with the vision of creating a new shopping experience,” Lore said. “Today, I couldn’t be more excited that we will be joining with Walmart to help fuel the realization of that vision. 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.”
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 differentiated customer experience with curated assortment. Walmart and Jet will leverage innovative technology solutions from both companies to develop new offerings.
The acquisition, which is subject to regulatory approval, has been approved by the boards of companies and is expected to close this calendar year.