Chart of the Week: Why did Walmart spend $3 billion on Jet?
A few weeks ago, rumors started circulating that Walmart was in talks to acquire Jet.com, an ecommerce site founded in 2013 by Marc Lore. Last week, Walmart confirmed the sale, shelling out $3 billion in cash for the Hoboken, N.J.-based startup that, among other things, offers lower prices to customers who purchase larger quantities of items.
Walmart’s Sagging Numbers
A $3 Billion Bargain?
According to Mattermark, a look at Walmart’s earnings and growth numbers shows significant stagnation, with some financial metrics reporting just 1% growth. It’s clear that their internal efforts at ramping up ecommerce technology and offerings have stalled, even as they’ve been trying to position themselves as a viable ecommerce contender against Amazon. For a retail behemoth like Walmart, $3 billion is a relatively small investment to acquire the talent and resources to refresh their digital strategy – given their current numbers, even an incremental improvement could make a huge difference.
Meanwhile, Jet has always had Amazon in its sights – just a few months ago, they announced a move to take on Amazon in the fresh grocery delivery vertical (an area that Walmart is also attempting to enter), as well as rolling out interesting sales models, such as offering deeper discounts at the expense of free shipping on returns. What remains to be seen is if Jet can now combine this ambition with Walmart’s considerable resources and infrastructure to disrupt the ecommerce space.