Walmart acquired e-Commerce startup Jet.com for more than $3 billion on Monday. Jet CEO and founder Marc Lore will manage both Jet and Walmart.
The transaction involves additional $300 million for the share incentives, making the total amount of purchase to $3.3 billion. It would be the biggest e-commerce company acquisition for Walmart second to Amazon.
Walmart's acquisition of Jet.com will strengthen the largest retailer's e-commerce great ability to amp up its line of talent to searching the most inexpensive way of shipping online purchases. The company anticipates a larger traffic for its e-commerce business and to lessen the wide gap with Amazon, CNBC reported.
"Amazon's got this huge lead. That lead is going to be tough to relinquish but there's a lot of [share] out there," said Moody analyst Charlie O'Shea.
Purchasing Jet was a wise move for Walmart to compete with Amazon, as it will not only provide Walmart a new line-up of digital talent, but will also assist the company to improve online and shipping logistics. This, in turn, plays an extremely important part of maintaining margins.
CEO and founder Marc Lore will handle both Walmart and Jet. His expertise is expected to lift up Walmart's online business. He is cited as one of the most significant entrepreneurs in regards to e-commerce industry. Lore was the founder of Diapers.com which Amazon acquired, according to Mashable.
Jet.com was only two years in the business and yet the company was able to raise an absolute $565 million since its operation in July 2013. Venture capital backed up Jet provided by the Wall Street and Silicon Valley along with Fidelity Investments, Google Ventures, Goldman Sachs, and General Catalyst Partners.
The agreement is anticipated to close this year which as always is subjective to regulatory approval. Both companies consider keeping their distinct brands. Walmart's website will continue to stress its "everyday low price" scheme. Jet.com, on the other hand, will offer a selective and organized experience that aims at millennials.
