When Jet.com launched last July we predicted that the company had no illusions it would beat out rival Amazon.com. Instead, our conclusion was that Jet.com was a company launched with the intent of being purchased. Twelve months later, it seems we were on the right path. It was just announce that, after being rumored late last week, Walmart has purchased Jet.com for $3.3 billion. This marks one of the largest acquisitions of an e-commerce company ever (by companion Amazon purchased Jet.com founder’s previous business, Quidsi – think Soap.com, for $545 million). The ubiquitous big box store is purchasing the e-tailer startup to bolster their online shopping efforts, which despite being second, distantly behind Amazon, has seen sluggish growth as of late. The goal is to make the Walmart.com experience more seamless and to accelerate growth. Jet.com will continue to exist (for now) and CEO Marc Lore will continue to head it up.
Jet.com tried to differentiate itself by creating a membership based site that constantly monitored prices at Amazon. The e-tailer priced goods equal or less than Amazon and provided additional paths for customers to save, such as buying in bulk or giving up your ability to return the item. Thankfully the company gave up on the idea of a $50 membership and instead double downed on their focus of offering competitively priced curated merchandise.
As difficult as it was to take Jet.com seriously in their efforts to compete with Amazon, we are surprised at their growth. According to reports, the site is processing 25,000 orders daily, adding 400,000 new shoppers per month, and has recently reached a $1 billion run-rate gross merchandise value! Jet.com’s success is largely due to the successful targeting of urban and millennial customers. Looping these shoppers into the Walmart family is a smart move, as they are the least likely to embrace the Walmart brand.