Hoboken, New Jersey-based Jet.com has distinguished itself in e-commerce through “gain sharing”, luring buyers to add items to their orders to reduce shipping costs, and to pay with debit instead of credit cards to reduce transaction fees. Items are priced according to their locations of distribution centers.
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In its fiscal year ended in January, Wal-Mart had online sales of $13.7 billion, a fraction of its total revenue of $482.1 billion.
Wal-Mart Stores Inc. signed a $3.3 billion deal to buy web retailer Jet.com Inc., bringing in some outside help to jump-start growth at the retail giant’s e-commerce operations.
The acquisition, which is still subject to regulatory approval, has been approved by the boards of directors of both companies and is expected to close this calendar year, the release stated. 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.
“The acquisition of Jet will infuse Walmart with fresh ideas and expertise, as well as an attractive brand with proven appeal, especially with millennials”, Wal-Mart said.
Walmart President and Chief Executive Doug McMillon called the acquisition “another jolt of entrepreneurial spirit being injected into Wal-Mart”. Wal-Mart and Jet.com each declined to comment on that. Walmart has also held its own midsummer sales to offset Amazon’s annual Prime Day. Part of Jet’s pitch to shoppers is software that helps it sell at lower prices by taking into account how customer choices hit profits, including basket size and the proximity of the merchandise.
“This acquisition in tandem with its joint-venture in China with JD.com, demonstrates that Wal-Mart is attacking online retail with significant zeal”, said Moody’s lead retail analyst Charlie O’Shea.
Even after all those efforts, Wal-Mart still trails Amazon in online sales.
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While still not profitable and burning through advertising money at a rate of $20 million to $25 million per month to fund its growth, Jet has been adding more than 400,000 new shoppers each month and processes an average of 25,000 orders daily.
