Wal-Mart Stores, Inc. and Jet.com, Inc. announced they have entered into a definitive agreement for Walmart to acquire Jet for approximately $3 billion in cash, a portion of which will be paid over time. Additionally, $300 million of Walmart shares will be paid over time as part of the transaction.
This is a huge opportunity for Walmart to infuse some much needed digital innovation into the organization in particular with the ever rising competition from Amazon.com.
Walmart has stated that eCommerce and Omni-channel is a key growth strategy for them with the additional announcement of their alliance with JD.com in China.
Under the management of founder Marc Lore, Jet.com has delivered an impressive track record of scaling quickly on all fronts from customer acquisition to product growth and retail and brand partnerships.
- Demonstrated ability to scale with speed, reaching $1 billion in run-rate Gross Merchandise Value (GMV) and offering 12 million SKUs in its first year.
- A growing customer base of urban and millennial customers with more than 400,000 new shoppers added monthly and an average of 25,000 daily processed orders.
- Best-in-class technology that rewards customers in real time with savings on items that are bought and shipped together, thereby reducing the supply-chain and logistics costs often buried in the price of goods.
- A select group of more than 2,400 retailer and brand partners tailored to create an attractive and distinctive assortment for consumers.
If Marc Lore will stay engaged post acquisition to run Walmart.com this would be a solid step forward in driving the Walmart eCommerce and omni-channel culture and technologies.
Innovation across online, mobile and in-store experiences could be game changing for Walmart. In their earnings release this month Walmart reported their Fiscal Q2 earnings with the following positive results:
Walmart reports Q2 FY17 EPS of $1.21, adjusted EPS1 of $1.07, Raises full-year adjusted EPS1 guidance range to $4.15 to $4.35 Diluted EPS was $1.21. Currency negatively impacted EPS by approximately $0.03.
Doug McMillon, President and CEO, Wal-Mart Stores, Inc said “We’re pleased with the positive momentum in our business. Our strategy in the U.S. is working as we delivered an eighth consecutive quarter of positive comps, and international also performed well. We remain focused on building e-commerce capabilities globally and executing our omni-channel plan, as evidenced by our recent alliance with JD.com in China and agreement to acquire Jet.com in the U.S. Walmart is uniquely positioned to provide customers with a seamless shopping experience where we save them time and money.”
Amazon.com is of course the competitor to watch and win against. But it wont be easy. Amazon’s CEO Jeff Bezos is constantly changing the game through eCommerce innovation, new distribution models, technology through Amazon Web Services as well as new consumer product innovations which are taking Amazon into consumers homes and on-the-go with mobile solutions. The bar is high, but with the combination of forces coming together through the Jet.com acquisition and the powerhouse Walmart purchasing power, distribution and brick & Mortar locations the game could get very interesting.