Walmart has agreed to buy Jet.com for around $3.3bn.
It’s an interesting purchase, Jet’s proposition is to sell stuff cheaper than Amazon and they’ve yet to make a profit. That’s not altogether surprising when they’re trying to be cheaper than Amazon, a company who have never worried about making a profit and are solely focused on growth.
So Walmart have in effect spent over 3 billion for a loss making company with 3.6 million customers which has turned over a billion dollars since their 2014 launch, compared with Amazon who turned over close to $80 billion in the last year alone.
It’s hard to see Jet being the sledgehammer Walmart will use to crack Amazon and is likely less about Jet’s customer base and turnover than it is about their technology. Actually it’s probably less about the technology than it is about the founder, a guy called Marc Lore who already made a fortune selling his first company Quidsi to Amazon.
Marc Lore has proved he can grow an ecommerce business and he’s proved he can create a compelling proposition that will attract buyers away from Amazon. That’s probably enough for Walmart.
As we said earlier this week, Walmart with Jet can probably put a dent in Amazon, but that’s likely to be all it is. Amazon’s lure with Prime benefits is way more attractive than Walmart’s own ShippingPass offering and it’ll take a lot to get an Amazon customer to jump ship.
Jet has proved that there’s a niche for people willing to shop somewhere other than Amazon and rather than trying to grab Amazon’s customers, the non-Amazon consumer is likely to be Walmart’s target. Jet.com with their smart pricing offers and fast shipping can add to Walmarts attractiveness to buyers, but it’s unlikely to worry Amazon too much.