“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 Doug McMillon, president and CEO of Walmart Stores, Inc. “we believe that the acquisition of Jet accelerates our progress across these priorities.”
Jet.com was cofounded and led by Marc Lore, an entrepreneur who created diapers.com and sold it to Amazon in 2010. Jet.com was featured by real-time pricing algorithm aiming to calculate the true marginal cost of getting a product to customers. Items are priced according to their locations of distribution centers. Buying products from the same distribution center will cost less than those from different centers due to the saving from logistic cost. Customers can waive the right to return, use debit card rather than credit card, and buy items in large scale to receive a lower price.
Walmart’s own online retail website, Walmart.com, was one of the biggest U.S. online retailers, while its online growth has slowed for nine straight quarters. Last year, Walmart’s ecommerce sales reached about $14 billion, accounted for 3% of its total revenue. However, the giant retailer still far lags behind Amazon whose sale was $107 billion last year. Acquiring Jet.com may help Walmart with online retail technology, but some people familiar with the startup say Jet.com only burns too much money without showing any distinguishing competitive advantage against rivals like Amazon.
The transaction is expected to close at the end of this calendar year. Jet.com and Walmart.com will maintain distinct brands.