Walmart And Jet.com Tie The Knot
Today, the companies officially announced the $3 billion deal with Walmart CEO Doug McMillon weighing in as follows:
“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. “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.”
While there may be eyebrows raised concerning the price Walmart is paying for a company that barely has $1 billion in revenue and no profitability, I applaud this deal as the kind of bold step that existing brick and mortar companies can and should take to try and even the playing field against a dominant Amazon.com.
Not only is Walmart buying an innovative e-commerce platform that attempts to lower prices to the consumer by focusing on crowdsourced deal participation and a new way to think about fulfillment, they are also acquiring the services of a visionary entrepreneur in Marc Lore, who thinks about e-commerce models differently. The synergies between Walmart’s merchandising, sourcing and financial muscle combined with Jet’s innovation could help further redefine e-commerce over the next decade.
While Walmart is paying a steep price, a healthy balance sheet, deep pockets and access to capital is one of their main strengths. It makes sense to leverage this in an effort to jump-start their e-commerce efforts. This infrastructure is already in place with Walmart Labs, which has made multiple acquisitions in the technology space. This puts that idea on steroids.
Acquisitions, by themselves, are almost never the answer. And certainly, at Jet.com’s current size, it barely makes a dent in Amazon’s lead. It will be up to Walmart to truly mine the synergies in the deal to show a demonstrable ROI.