After much speculation, brick and mortar giant Walmart went through with its sale of rising pure play e-tailer Jet.com.
Walmart bought Jet–which has aggressively gone after Amazon since its inception just a year ago–for $3.3 billion in cash and stock. The deal is the largest-ever purchase of a U.S. e-commerce startup and “a sign Wal-Mart CEO Doug McMillon sees the shift to online shopping and the expansion of Amazon.com as existential threats to the company’s five decades of growth,” according to the Wall Street Journal.
This all underscores Walmart’s investment and commitment to its growing online presence.
Walmart has aggressively been going after online business. Four years ago, they had under two million items online. That number jumped to eight million in 2015, and now there are 10 million items available at Walmart.com. Walmart also plans to add 1 million products per month, primarily through third-party vendors selling via Walmart.com. This might all seem paltry to Amazon’s merchandise mix (coming in a 260 million items), but once can see how Walmart hopes to shrink the gap with a Jet purchase. Walmart doesn’t break out a quarterly figure for online sales, but it said its e-commerce business had grown 7% in the last quarter, according to reports.
Wal-Mart’s e-commerce sales last year reached nearly $14 billion, or 3% of its $482 billion in annual revenue, according to the Wall Street Journal. In just over 20 years of business Amazon’s sales hit $107 billion last year, including its Web-service business.
And Jet is on the rise too (even though the new company isn’t profitable yet). Late last month, Jet’s CEO and founder of Diapers.com, 45-year-old Marc Lore, said Jet sold $90 million in merchandise in May, versus just $33 million back in December.
Jet’s model of encouraging bulk buying would complement Walmart in areas where the retailer has lagged, retail analyst Neil Saunders told The New York Times. Jet also uses sophisticated metrics like cart/basket size, ship options and customer location and to offer lower pricing.