“We believe the acquisition of Jet accelerates our progress across these priorities”.
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“Wal-Mart Stores, and Jet.com today announced they have entered into a definitive agreement for Walmart to acquire Jet for approximately United States dollars 3 billion in cash, a portion of which will be paid over time”.
Jet.com was cofounded and led by Marc Lore, an entrepreneur who created diapers.com and sold it to Amazon in 2010. On Monday, the company said it was buying Jet, the year-old online bulk retailer, for $3.3 billion, the largest deal ever for an e-commerce company. Last year, Walmart’s ecommerce sales reached about $14 billion, accounted for 3% of its total revenue.
The statement further said that Jet is among the fastest growing and most innovative e-commerce companies in the USA, with an experienced leadership team led by co-founder and CEO Marc Lore, together with fellow co-founders Mike Hanrahan and Nate Faust.
The Journal reported last week that Wal-Mart was in talks to buy the unprofitable startup, which launched a year ago and has been spending heavily to market itself.
Traditional retailers have spent more than a decade and billions of dollars trying to transform their brick-and-mortar businesses for the online shopper.
With regard to its post-acquisition plans for Jet.com, Wal-Mart said that the startup’s innovative pricing software will be integrated into the main Wal-Mart website.
While Walmart dominates the brick-and-mortar retail ecosystem in the US, its online sales trail that of its greatest e-commerce competitor, Amazon. Wal-Mart also started an annual subscription service similar to Amazon Prime, but costing half the price. Amazon has dominated e-commerce during its more than 20 years in business.
While Wal-Mart is one of the biggest USA e-commerce players, it has struggled to keep pace with Amazon.
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“A Wal-Mart and Jet.com tie-up could firmly make the e-commerce battle a two horse race”, said Simeon Gutman, an analyst at Morgan Stanley. Jet’s website processes an average of 25,000 orders a day. Walmart.com and Jet.com will continue to operate as distinct brands, with Jet keeping its focus on “a unique and differentiated customer experience with curated assortment”, according to today’s announcement.
