'Seamless shopping experience will happen quicker,' McMillon says
BENTONVILLE, Ark. — Following recent reports that a deal was in the works, Walmart announced that it’s buying online retailer Jet.com Inc. in a transaction valued at $3.3 billion.
Walmart said Wednesday that under the agreement, it will buy Jet for about $3 billion in cash and $300 million in Walmart shares. Some of the cash and all of the shares will be paid over time, according to Walmart.
Battling online retail giant Amazon for consumer dollar and mind share, Walmart noted that the acquisition of Jet will infuse the company with “fresh ideas and expertise, as well as an attractive brand with proven appeal, especially with Millennials, the first generation of true digital natives.”
Walmart said the addition of Jet will build on and complement the e-commerce foundation that it already has in place with the Walmart app, site and stores while expanding its customer reach and bringing new capabilities.
“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,” Walmart president and chief executive officer Doug McMillon said 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.”
Plans call for Walmart and Jet to maintain distinct online brands, with Walmart.com focusing on the company’s everyday-low-price strategy and Jet continuing to provide a “unique and differentiated customer experience with curated assortment,” Walmart said. Both retailers said they will leverage each other’s technology to develop new offerings for customers.
Walmart pointed to the swift expansion of Jet in the competitive online retail market, as the e-tailer reached $1 billion in run-rate gross merchandise value and offered 12 million SKUs in its first year. Jet’s base of urban and Millennial customers adds more than 400,000 new shoppers monthly and generates an average of 25,000 daily processed orders.
In addition, Jet has built an attractive product assortment from more than 2,400 retailer and brand partners, and its best-in-class technology rewards customers in real time with savings on items bought and shipped together, reining in supply chain and logistics costs often tied to the price of goods, Walmart said.
“We started Jet with the vision of creating a new shopping experience,” Jet co-founder and CEO Marc Lore stated. “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.”
Walmart said the transaction has been approved by both companies’ boards of directors and is expected to close this calendar year, pending regulatory approval.
“Walmart has been fighting a multi-front war against both traditional retailers and the likes of Amazon and is clearly working hard to turn around its operations. The announced acquisition of Jet.com appears to be Walmart’s biggest foray online and a defensive move aimed directly at Amazon, after Walmart’s e-commerce sales have slowed for five consecutive quarters,” Wolfe Research analyst Scott Mushkin wrote in a research note Monday. “The big question, in our minds, is what the overall impact on profitability will be to Walmart as the company works to drop prices at its retail stores, particularly in consumables, and also invests heavily in e-commerce.”
*Editor’s Note: Article updated with analyst comment.