It was not clear how much Wal-Mart would pay, but Jet could be worth as much as $3 billion, the WSJ said. Jet's warehouses and customer data would help Wal-Mart in its push to expand its online business and home delivery services.
There was speculation long ago that Jet's only intention was to get bought out by someone huge. They've been operating at a loss just to get a customer base that someone like WalMart might actually care about
ebestbuy said: Slick29832 said: why would anyone spend $2b on a company that has never made money? Give me the $2b. That's because they know WalMart online business model sucks and jet.com rocks Actually to me WalMart. com is my primary source for Wii and Wii U games. Their pre-owned pricing is usually unbeatable. However, if I compare the trade in price against the retail price, they probably make no profit. Eg. I bought a pre-owned Wii U game for 24.80 and the trade in price is $20 in WalMart GCs. In addition they shipped the game for free to the local WalMart Neighborhood store. There are also many other cases on FW that WalMart had unbeatable clearance prices for electronics. WalMart. com has a terrible search engine and I found it easier to search using Google with WalMart as a keyword..... Jet wanted to be the Amazon killer but their weakness is not only in pricing. I had a hard time finding the stuffs I need while Amazon almost always has everything. Also they sent the wrong product to me once and it was a bit of a hassle to get it exchanged. I can't see it getting any better even if they merge.
Jet is almost identical to Quidsi(Soap.com's parent company). Marc Lore is one of the co-founders of both companies. Looks like Marc Lore just wants to cash out. It is a huge mistake that WalMart to buy it. Can they compete with Amazon? There is another start up called Boxed.com, also locates in NJ.
I agree with your statement although you must agree jet.com is nothing like Amazon.com which nearly every American shops at. I only go on jet.com when they sent me 30 or 50% discount codes. Otherwise it's Amazon for me. I can't remember when I walked into a WalMart. Aren't they like Circuit City and going away?
Huh - WalMart.com is not that bad - I have tried their shippingpass and while they have missed a couple dates, they have made most of them. And the pricing is unbeatable. I am not sure what jet would bring to the table. Well, what do I know. I am sure someone upstairs knows it all and it is only 2B anyway.
Slick29832 said: why would anyone spend $2b on a company that has never made money? Give me the $2b. Facebook bought Instagram back in 2012 for $1 billion Faceboook bought Whatsapp for $19 billion.. let me repeat.. NINETEEN BILLION DOLLARS back in 2014
"Why WalMart wants to buy Jet.com and what you need to know about the potential deal
August 3, 2016
It was recently announced that Wal-Mart Stores Inc. is in discussion to acquire an up and coming US etailer, Jet.com.
Jet.com seeks to revolutionize the logistics of ecommerce: Marc Lore founded Jet.com just last year in July 2015. He’s known for his previous ecommerce ventures such as Quidisi.com. Jet.com raised more than US$500 million in less than a year, and was highly anticipated to capture a large share of the growing ecommerce market in the US.
Jet.com differentiated itself from other ecommerce retailers through its real-time savings engine that gives customers the power to drop prices while they shop. Through this technology, Jet sought to revolutionize ecommerce logistics by calculating in real-time the most efficient way to fulfill orders and pass those savings onto shoppers.
Jet.com showed impressive growth within a year: Based on the data released by the company in July 2016, the etailer has shown impressive topline growth, crossing a US$1 billion run rate in gross merchandise value (GMV) with over 4 million shoppers on its platform. Executives from Jet.com have also emphasized that customers are, in fact, embracing Jet’s real-time savings technology by building large baskets with over six units per order and a relatively high average order value of over US$80. In July 2016, executives from Jet.com revealed that the company is still heavily investing in its brand-building efforts and had not yet reached profitability.
As ecommerce sees continued growth, retailers both online and offline are ramping up their ecommerce efforts. With the rise of omnichannel retailing, perfecting ecommerce services will be key to future growth for all types of retailers.
Wal-Mart is likely after Jet’s assets other than gross merchandise value: Even though Jet.com reached an impressive run rate of US$1 billion in less than a year, US$1 billion is not much in the big world of ecommerce (less than 1% of the total market in 2015). Therefore, it is likely that Wal-Mart would like other things from Jet.com (described below) other than gross merchandise value from this acquisition. However, it could be that Wal-Mart believes in Jet’s ambitious five-year growth plans to reach US$20 billion in gross merchandise volume by 2020. Growing from zero to US$20 billion in five years is faster growth than what WalMart.com has achieved from 2010 to 2015, so there is a chance that the acquisition is for online GMV growth. But even at US$20 billion in 2020, Jet.com would only have 4% of the ecommerce market in the US.
Acquiring Jet.com will enable Wal-Mart to become more competitive online: Despite its uncontested dominance in US store-based retailing with 13% market share (followed by Kroger with just 4% market share), WalMart ranks 4th in ecommerce sales with just 3% market share. The leader of US internet retailing is Amazon.com with over 31% market share.
Acquiring Jet.com would allow WalMart to become more competitive with etail giants such as Amazon and eBay, as Jet’s innovative ecommerce practices would greatly assist Wal-Mart to improve its online services. By strategically locating its distribution centers and streamlining its logistics, Jet has doubled its one-day delivery (of its own first-party products) penetration rate from 25% to 50% of US households since its launch, and is approaching 99% of US households for two-day delivery. In select high-density regions such as New York City, Jet often is able to offer same-day delivery at no additional cost to both Jet and its shoppers. Wal-Mart will gain significantly from Jet’s logistics and delivery expertise.
Additionally, Jet.com has already expanded into grocery delivery, something that Wal-Mart has yet to experiment with. Although Jet is still in its trial period for grocery delivery, the etailer has received positive feedback from customers. Jet’s learnings from this experience can greatly add to Wal-Mart’s very likely attempt at grocery delivery in the near future.
Furthermore, Wal-Mart has recently been making a bigger push into the marketplace model, which aligns well with Jet’s model. Jet.com has 2,300 retailers selling on its platform and 12 million products. Both companies are working to increase their product portfolios by working with committed sellers, and by supporting their sellers with technology.
Other bidders may emerge: In the past, Wal-Mart had discussed the possibility of acquiring Quidsi, Marc Lore’s previous company, but did not move quickly enough. Instead, Amazon.com acquired Quidsi in 2011 for US$545 million and integrated the company into its business. It will be interesting to see if other bidders emerge."
Written by Michelle Malison Michelle Malison Industry Research Analyst-Retailing at Euromonitor International
ganda said: fivetalents said: HLN noted that Jet has much more upscale clientele who spend more.
I've shopped at Jet and I'm not upscale at all HLN did not mean affluent or high income. I don't think that that they were in any generalizing that to ALL Wal mart customers or disparaging anyone either... but instead were just noting that Jet customers spend more on AVERAGE (and that Jet carries higher quality items like furniture that their customers are willing to spend more on than the average Wal mart customer). There are plenty of Jet customers, like me (and many FWers) who try to get the most product for the least money spent so, like anything else, no characterization can apply to every single member of a group although an a average provides a fair(er) estimate.
I've personally shopped at both online retailers about equally... which is infrequently because most of the time Jet's prices are not the lowest and I don't care for Wal mart's mistreatment of their employees (or strong arm tactics with manufacturers to drive prices down, poor security of consumer accounts & refusal to take accountability for theft of gift card balances, etc.). So I don't see myself being impacted directly as a customer of either online business, but more so indirectly as it may lead to decreased incentive to compete to lower prices, especially if they abandon Jet’s unique business model.
I purchased from Jet once (bathroom faucet) and they passed the order off to another company that shipped the item almost a week after my order. I saved a little because of the coupon they offer to one time customers but probably won't use them again. I think most of Jet's customers are also Amazon customers and maybe even WalMart online customers, as I am. Don't understand why WalMart would pay so much for such a company.
Slick29832 said: why would anyone spend $2b on a company that has never made money? Give me the $2b.
Isn't this the typical startup business model? 1. Copy someone else's idea (and alter it slightly) to secure VC money 2. Use VC money to offer deep discount in order to gain customer base 3. Get bought by some large company 4. Profit!
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