Why did Walmart buy Jet.com?
When news first broke last month that Walmart was in talks to acquire Jet.com, many questioned whether the deal made sense, especially if you stopped to consider the reported $3 billion+ price tag. Well, Walmart announced yesterday that it is now the new owner of Jet.com and CEO Doug McMillon published a list of five reasons why he and the retailer’s board believe they made a smart move.
- Jet.com offers more ways for Walmart to serve its existing customers online while acquiring new ones. Walmart pointed to several things Jet has done, including developing a model that allows customers to save more based on buying more. He also pointed to Jet offering lower prices based on consumers opting out of free returns.
- The acquisition will help Walmart build on its e-commerce foundation and accelerate growth going forward. Walmart said that it has more than doubled the number of items on its site to more than 15 million over the past six months and is adding another million on a monthly basis. It says the company has “built an impressive fulfillment network” that will be further enhanced by bringing Jet onboard.
- The customer bases of the two companies are complementary. Jet reaches “urban Millennials” while Walmart has attracted shoppers with low prices and a variety of pick-up options. Both Jet and Walmart “will be able to leverage each other’s assets” to offer new ways to serve their customers.
- New talent, specifically in the person of Jet’s founder Marc Lore, will be a valuable asset to Walmart. Mr. McMillon and company believe that bringing Jet’s people on board will give Walmart the most talented team in retailing.
- The future of retail requires merchants to save consumers both time and money — two areas where Jet excels. Walmart believes that in acquiring Jet’s talent, technology, shopping experience and customers it is poised “to win the future of retail” and exceed expectations for years to come.
- Five Big Reasons Walmart Bought Jet.com – Walmart Stores, Inc.
- Walmart Completes Acquisition of Jet.com, Inc. – Walmart Stores, Inc.
DISCUSSION QUESTIONS: Do you believe Walmart’s rationale for making the deal to acquire Jet.com is valid? What will be the keys to unlocking the potential of Jet now that the deal is done?