It's hardly a secret. If you are not Amazon in the e-commerce marketplace space, then it's obvious that you are competing for No.2.
Walmart knows that. Jet.com certainly knows that. Join these two together and you potentially have a No. 2 worthy of Amazon's steamrolling.
So watch out No.1, because Walmart has just scooped up Jet.com. It's paying $3 billion in cash and another $300 million in stock.
Jet.com is the flashy toddler startup that's been keen on kicking Amazon's behind for a year now. And though it's not exactly doing that, it's certainly impressing its customers with unmatched discounts. Something that has been at the core of company's philosophy. Even when it was offering an annual membership fee of $49.99, then ditched it.
Here's why it's likely a match made in heaven
Walmart is playing in a field where, according to ABC News, it generated online sales of $13.7 billion (a fraction of its total revenue of $482.1 billion) while Amazon.com generated an annual net revenue of $107 billion.
With Jet.com by its side, Walmart will be able to tap into the year-old company's e-commerce strengths. It will also tap into its fresh ideas and expertise, as well as a brand appeal that's worthy of Millennials – the first generation of true digital natives.
Apart from an experienced leadership team led by co-founder and CEO Marc Lore, together with fellow co-founders Mike Hanrahan and Nate Faust, Jet also has:
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. Read more…
Jet.com also has a lot to gain from this deal.
Walmart is bringing in a massive customer base that is clearly not something to complain about.
Walmart also has a huge network of stores that can be used as distribution centres for products sold online. According to Business Insider, the retail giant has more than 4,500 stores in the US and 102 distribution facilities. Compare that to Amazon's 180 US fulfillment centers.
And about riding off into the sunset…
The deal is expected to close this year after regulatory approval.
Both companies will remain distinct brands each playing their part in the Amazon battle.
This deal follows a series of similar ones where major traditional retailers aquire online startups in an extremely competitive landscape. In January, Hudson's Bay, which owns Saks Fifth Avenue, acquired flash-sales site Gilt Group. And in June, Bed, Bath & Beyond purchased One Kings Lane.
It is not the first time that Walmart is making a major move to compete with Amazon. According to Venture Beat, Walmart has tried a number of things, including making acquisitions through its innovation center. Through Walmart Labs, the retail giant acquired the point-of-sale startup Grabble, iPhone app agency Small Society, big data startup Inkiru, and site performance service Torbit.
Having Jet.com as an addition to the list looks like a win in theory. Let's wait to see how it'll play out in reality.