The deal, one of the biggest e-commerce sales yet, is designed to bulk up Walmart’s online presence.
Walmart is hoping to take its online presence to new heights — and is willing to pay big to do it.
The world’s largest brick-and-mortar retailer said Monday it has signed a deal to acquire e-commerce startup Jet.com in a cash and stock deal worth $3.3 billion. The purchase, expected to close this year, would be one the biggest amounts ever paid for an e-commerce company.
The deal could create a significant rival to Amazon, after the largest e-commerce player worldwide has for years has been the undisputed king of online retail. That increased competition might create more choice for online consumers, force prices lower and puncture the dominance of Amazon and its Prime loyalty program.
Still, Walmart — even with Jet.com — would have a long way to go to catch up to the Seattle retailer. While Walmart makes significantly more revenue that Amazon overall, Walmart’s e-commerce sales last year were a mere $13.7 billion. Amazon’s were $107 billion.
“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,” Walmart CEO Doug McMillon said in a statement.
Walmart and Jet.com disclosed that the retail startup adds 400,000 new shoppers every month and processes an average of 25,000 orders each day. Since officially launching just over a year ago, Jet’s marketplace is on track to hit $1 billion in total sales from both the company and third-party sellers.
Walmart and Jet will maintain their separate brands. A bulk of the deal is in cash, with Walmart paying $300 million in stock over time.
The acquisition is the second major exit for Marc Lore, CEO and co-founder of Jet. Lore started Quidsi, parent of Diapers.com and Soap.com, and eventually sold it to Amazon for $545 million in 2011 after a price war between the two companies. He stayed at Amazon for a few years, but departed to start Jet. Lore raised $565 million in funding, according to Crunchbase, a huge sum for a startup and a clear sign of investors’ confidence in Lore’s abilities to take on Amazon again.
Jet.com distinguished itself by offering real-time discounts to customers for purchasing more items from the same warehouse and for waiving free returns, both of which save Jet money. The company developed a complex algorithm to power these discounts, likening it to a real-time trading platform.
Despite plenty of skepticism that Jet.com could — from scratch — take on Amazon, Lore offered a hugely ambitious plan for growing Jet to have $20 billion in sales by 2020. He may now pursue that goal under Walmart.
Lore will continue to run Jet.com, a Walmart spokesman said Monday, though he declined to offer more specifics. The Wall Street Journal reported that Lore will join Walmart’s senior ranks, while Walmart’s e-commerce chief, Neil Ashe, is expected to leave the company.