Walmart has taken its biggest digital commerce stride against Amazon. The retail giant announced that it would be acquiring Jet.com — an online-only shopping site that has been live for a little over a year — for $3 billion in cash, plus up to $300 million in shares for the founders and others at the company.
Jet.com will continue to retain a separate brand, Walmart said today, as part of Walmart’s strategy to widen the types of consumers that it targets beyond Walmart’s core user base today; and also to broaden the companies that it works with to serve those customers.
Marc Lore, the CEO of Jet.com, will lead both Jet and Walmart online, taking over from Neil Ashe. “This is Walmart being even more committed to winning in e-commerce,” said Doug McMillon, president and CEO of Walmart, in a conference call with investors, who said described the executive change was “a natural transition.”
“What [Lore] has built at Jet has applications at Walmart,” he added. “The job [he will be taking over] is more focused on U.S. e-commerce and that makes sense to us.”
Ashe, whose job was CEO and president of global e-commerce and technology for Wal-Mart Stores, Inc., had been with the company since 2012 and had been moved over to also run Walmart Technology in January 2016, which is the division that focuses on aligning the in-store experience with the digital and virtual one. It’s not clear if Ashe will continue running that post the acquisition (we’re asking).
McMillon added that although Jet.com had expected to be profitable by 2020, he said that he thought this would be sooner now under Walmart through economies of scale around shipping, employment and other kinds of supply chain management. “There is a period of investment here and we are not updating out guidance today, but we don’t have a short term mentality and focused on winning with the customer.”
The deal is expected to close by the end of this year, subject to regulatory clearance.
“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 McMillon in a statement. “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.”