Walmart is coming for the e-commerce throne, Amazon. The retail giant has just announced it is acquiring Jet.com for $3.3 billion in an effort to expand its online shopping footprint.
“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, Walmart's President and CEO. “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.”
The purchase, which includes $3 billion in cash and $300 million in stock, will potentially help Walmart revamp its slowing e-commerce strategy. In the company’s Q1 earnings report, Walmart revealed just a 7 percent year-over-year growth rate. According to a report by CNN Money, Amazon's overall sales have grown to over $100 billion annually.
So how will Jet.com factor into Walmart’s strategy? The online startup, which launched in July 2015, is targeted to younger shoppers who are seeking to buy in bulk to save money. CNN reports that customers can also find savings from purchasing various tagged items that can be shipped in the same box from a nearby vendor. That technology, which is proprietary to Jet, helps bring down logistics costs dramatically.
“We started Jet with the vision of creating a new shopping experience,” said Marc Lore, Jet.com’s CEO. “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.”
Lore previously sold his Diapers.com business to Amazon in 2010 for over $500 million.
The acquisition, is still subject to regulatory approval, according to a press release, but has been approved by both companies' Boards of Directors, and is expected to close this calendar year.