On August 7th 2016, Walmart announced that it is buying e-retailer Jet.Com for $3 billion dollars. It's a cash deal that also includes $300 million is Walmart stock that will be paid out over time. Jet.Com is an e-commerce startup that was co-founded by entrepreneur, Marc Lore in 2014. It was recently valued at $1.6 billion. Lore will stay on and run both Walmart.Com and Jet.Com.
The deal signals Walmart's intent to step up its online presence and challenge Amazon.Com's e-commerce dominance. Walmart currently averages $14 billion in online sales compared to Amazon's $99 billion. While Walmart has been on line for 15 years and has spent billions building up its e-retail site, which includes seven distribution centers, its growth rate has been slow and has actually decelerated in the last year.
Jet.Com made its mark through the use of "gain sharing," which offers buyers the opportunity to reduce the price of their orders by adding additional items. Shoppers could also reduce their transaction fees by using their debit cards instead of credit cards. Walmart hopes to use Jet.Com's pricing technology to further reduce its shipping costs, while ramping up its delivery speed.
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