The Jet and Pilot Have Landed
Exactly a year ago I wrote in this space about startup
Jet.com which just went live with a unique business and pricing strategy that had the potential to disrupt the e-commerce landscape. I, like many others, predicted that if the new venture showed signs of success it would be acquisition bait for the big dogs fighting it out for digital retailing supremacy.
While it was certainly not shocking when Walmart announced in early August that it had come to terms to purchase the upstart, the speed with which the acquisition occurred and the price paid certainly raised some eyebrows. With a price tag of $3 billion, plus an additional $300 million in Walmart stock, the acquisition was the largest deal ever for an e-commerce company.
“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, president and CEO, Walmart in a statement announcing the sale. “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. Our customers will win. It’s another jolt of entrepreneurial spirit being injected into Walmart.”
It is that last line from McMillon — “jolt of entrepreneurial spirt” — that is the most telling and may well be the reason the retailing giant was willing to pay such a high price for the upstart when there were no other offers on the table. As part of the deal, Jet founder and CEO Marc Lore agreed to run the U.S. e-commerce businesses of both Jet and Walmart — a major win for Walmart.
As Walmart looks to accelerate its online growth and connect with highly profitable and influential Millennial shoppers, it will have a true digital innovator at the helm with a proven track record of e-commerce success. In addition to founding Jet, Lore co-founded, led and eventually sold Quidsi, the parent company of e-commerce sites Diapers.com, Soap.com and Wag.com. Walmart missed out on the sale of Quidsi to rival Amazon in a bidding war in 2010, and was intent on not only acquiring Jet before Amazon showed interest, but bringing the mastermind behind the site in-house.
“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 said in a statement.
Will the addition of Jet and Lore be the shot in the arm Walmart’s e-commerce team needs? That remains to be seen. But with online growth for the most recent quarter sitting at an uninspiring 7%, Walmart needed to make a move.