And the American e-commerce war begins!! As Amazon arms itself up with cargo planes (and drones ?) Walmart has today announced that it has decided to acquire two-year old e-commerce company Jet.com for $3 Billion in a mix of cash and stock. The transaction has been approved by the boards of Directors for both companies and is expected to close by the end of this year.
Walmart, in a bid to expedite its already established e-commerce background and expand its customer reach has agreed to pay $3 billion cash for Jet. Additionally, $300 million of Walmart shares will also be paid over time as part of the transaction.
The two companies will now work to create synergies and build upon and complement the significant foundation already in place to serve customers across the Walmart app, site and stores. It will also look upto Jet.com to improve customer experience by adding new capabilities and further improving on product prices and delivery time.
Carrying forward the same point and commenting on the acquisition, Doug McMillon, president and CEO, WalMart Stores, Inc. says,
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. We believe the acquisition of Jet accelerates our progress across these priorities.
He further adds that the acquisition of Jet will infuse Walmart with fresh ideas, expertise, and an entrepreneurial spirit. This partnership will, thus, help Walmart.com grow faster. While on the other hand, the e-commerce platform that has garnered immense appeal among Millennials will become even more successful in a shorter period of time, adds McMillon.
Post acquisition, both Walmart and Jet.com will maintain distinct brands and operate independently. Walmart.com will continue to 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 of products on its platform.
To become America’s premier e-commerce platform, Marc Lore, Mike Hanrahan and Nate Faust set out to create Jet.com in 2013. The company has managed to raise hundreds of millions of dollars(about $1.5 billion) from the likes of Alibaba and others. The company has been acquired at the exact value at which is was looking to raise more funds by the end of this year.
Walmart reports that Jet.com has been able to show signs of strong growth and scalability by achieving $1 billion in run-rate Gross Merchandise Value (GMV) and offering 12 million SKUs in its first year. It also has a growing customer base, with more than 400,000 new shoppers added monthly and an average of 25,000 orders processed daily. It also has a real-time customer savings model, that provides them with savings on items that are bought and shipped together, thereby reducing the supply-chain and logistics costs.
Commenting on the acquisition, Marc Lore, CEO, Jet.com adds,
We started Jet with the vision of creating a new shopping experience. 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.
Earlier reports cited the fact that acquisition was stuck due to the decision of who will head WalMart.com after acquisition. They hinted that Marc Lore would come on to run all of Walmart’s e-commerce business, but this hasn’t been confirmed in today’s announcement.
The main question that, however, still looms around this whopping acquisition is that will WalMart and Jet.cok together be able to take on the likes Amazon or not? And the simple answer to the same is – We’ll just have to wait and see if this transforms into a successful partnership.