Jet.com Reportedly To Be Acquired By Walmart For $3 billion

Above: Jet.com employees celebrate the launch of the company on July 21, 2015. Image Credit: Jet.com/Facebook Jet.com reportedly will be acquired by Walmart in a deal said to be worth $3 billion, the culmination of talk that first made waves last week. Under the terms of the deal, Jet cofounder and chief executive Marc Lore will remain at his post and will helm Walmart’s U.S. ecommerce operations. The person Lore’s replacing at Walmart, Neil Ashe, is said to depart “after a transitional period.” Launched in 2015, Jet aimed to take on Amazon, Walmart, and other online retail giants, offering a new spin on the shopping club. Early on its strategy included taking orders from customers on goods that it didn’t carry, but would facilitate the transaction on stores and sites that did. Months after it launched, Jet eliminated its $50 annual membership fee in a move that shifted the company’s business model towards gaining more profit from items sold. Until that point, membership fees were Jet’s main source of revenue since it sold items to customers at a discounted price in the hopes it would be more appealing. However, once the fees were dropped, Lore explained that the company modified the discount percentage: “It turns out 4 to 5 percent is enough of a discount for shoppers,” he said. The pick-up of Jet hopefully will invigorate Walmart’s ecommerce operations so that it’s better suited to take on Amazon and other retailers. Long-time corporations are hungry for ways to remain competitive as more digitally savvy businesses are taking money and market share away from them. Jet’s integration into Walmart will surely offer up the necessary resources to grow the brand, especially since Walmart is the second largest U.S. ecommerce retailer. Incumbent retailers are looking for ways to rival Amazon and Walmart has tried a variety of things, even made acquisitions through its innovation center. With Walmart Labs, the retail giant has acquired the point-of-sale startup Grabble, iPhone app agency Small Society, big data startup Inkiru, and site performance service Torbit. Earlier this year, the division was merged with Walmart’s information systems team to streamline things and boost Walmart’s ecommerce offerings. It’s said that the appeal in Jet is not the gumption that the online retailer could take on Amazon, but its technology stack. Recode cites Jet’s capability to identify orders that should be routed to the appropriate vendors in real-time that will keep costs low and thereby increase discounts on larger orders. The deal is still based on reports, but is expected to be formally announced on Monday. Should it go through, it’ll rival the last ecommerce acquisition in which Dollar Shave Club was bought by Unilever for $1 billion. Currently discount online seller Zulily is the most expensive retail acquisition, having been picked up by QVC parent company Liberty for $2.4 billion in 2015. Lore has had extensive experience in online retail, having cofounded Diapers.com before selling it to Amazon for $550 million. Years later, he was back at it again to once again take on Amazon and amassed quite a bit of venture capital to fund his ambitions — it picked up more than $565 million from investors like Accel, Bain Capital Ventures, Fidelity Investments, Forerunner Ventures, General Catalyst Partners, GV, Goldman Sachs, Alibaba Capital Partners, New Enterprise Associates (NEA), and Norwest Venture Partners. Wal-Mart Stores Jet Wal-Mart Stores, Inc. (NYSE: WMT) serves customers and members more than 200 million times per week at over 9,700 retail units under 69 different banners in 28 countries. With fiscal year 20... All Wal-Mart Stores news » Track Wal-Mart Stores's Landscape to stay on top of the industry. Access the entire ecosystem, track innovation & deals. Learn more. Jet will operate out of Hoboken, New Jersey, and is working on an innovative logistics network, though we still don't know what the site will actually sell. Because Lore has already been up-... All Jet news » Track Jet's Landscape to stay on top of the industry. Access the entire ecosystem, track innovation & deals. Learn more.