Earlier this year, Walmart acquired Jet for $3.3 billion. At first glance, the two companies use opposite retail models. Walmart owns the brick-and-mortar space while Jet relies on e-commerce. At the time, most focused on what Jet could offer Walmart. Of course, after a closer look, the American retail giant has just as much to offer Jet.
Jet is an e-commerce site only a few years old. The company’s focus on low-cost brought early success. In the world of retail, that is not enough. A new company needs time to build relationships with suppliers and consumers. Another disadvantage is its size. Compared to other e-commerce giants like Amazon, Jet does not have the infrastructure to compete. Walmart does. After the acquisition, Jet has access to the retail giant’s supply chain, infrastructure, and so much more. These essential components would take a smaller company decades to build from scratch, if at all.
Walmart and Jet: Is it a match?
If Jet gets such a good deal, how does Walmart benefit? In recent years Walmart has expanded its presence online through initiatives like online grocery shopping, ShippingPass, etc. However, the company’s best customers are of an older generation who are more likely to drive to the nearest store than shop online. It has yet to bridge the digital gap between its sites and the younger generation. Rather than develop their own e-commerce strategies, Walmart acquired an e-commerce focused company. This gives them access to a new customer base and a mature e-commerce system.
There are kinks for the two companies to puzzle through. Some wonder when the two will integrate (or if they should integrate at all). That said, there is no denying the retail force of this deal. Other companies like Amazon should keep an eye on things. Just in case.
Are deals like this the future of retail? Check out another article we wrote on the Jet and Walmart deal here.
Sharon Shichor is the CEO of Eighteen Knowledge Group LLC, your solution and knowledge base for brand building and getting your products in the hands of consumers. With over 15 years of wholesale-retail experience, she speaks the language of Walmart fluently.