BENTONVILLE, Ark. – Wal-Mart Stores Inc. agreed to purchase online retailer Jet.com for $3.3 billion in cash in addition to $300 million of Walmart shares to paid over time. The Walmart board of directors already has approved the acquisition which remains subject to regulatory approval.
Walmart and Jet.com will maintain distinct brands. Walmart.com will focus on implementing the company’s Everyday Low Price strategy, while Jet.com will provide expertise with curated product assortment. Combined, Walmart and Jet plan to leverage technology solutions to develop new offerings for customers.
“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,” Doug McMillon, president and CEO, Wal-Mart Stores Inc., 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.”
Walmart cited Jet’s ability to scale with speed, a growing customer base of more than 400,000 shoppers added monthly; best-in-class technology and relationships with more than 2,400 retailers and brands as reasons for the acquisition.
Under terms of the agreement, Marc Lore, founder of Jet.com, will take a senior leadership role in the e-commerce business and Neil Ashe, president and CEO of global e-Commerce at Walmart, is expected to leave the company, according to news reports.
“We started Jet with the vision of creating a new shopping experience,” Lore said in a statement. “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.”
Jet.com was positioned as a competitor to online retail giant Amazon. A Wall Street Journal report from 2015 found that the company had the highest valuation among e-commerce startups despite taking significant losses on many orders because the company, at that time, had not signed on enough retailer and brand partners.
Walmart launched its e-commerce site more than 15 years ago and currently operates online sites in 11 countries. In the United States, Walmart increased its total market coverage for grocery pick-up to nearly 40 by the end of May, up from 22 markets at the beginning of 2016.
Walmart has pledged to spend more than $1 billion on e-commerce and digital capital expenditures this fiscal year. The company also launched ShippingPass program in November 2015 which offers customers unlimited free shipping for $50 for one year. The program evolved to free unlimited two-day shipping for $49. Approximately 11 million products are available through Walmart.com.
Walmart reported first quarter net income of $3.08 billion, equal to 98 cents per share on the common stock and net sales of $115.90 billion.