Skip to main content
  1. Home
  2. Business
  3. News

Digital Trends may earn a commission when you buy through links on our site. Why trust us?

Walmart buys Jet.com in a move that ups the ante against Amazon

By

walmart black friday
tupungato/123rf
It’s official — Walmart is going to pay $3.3 billion, $3 billion of which will be in cash, to purchase the entire online operation of fledgling retailer Jet.com. This is reported to be one of the largest ever acquisitions of an e-commerce firm. While the $3 billion will be paid out over an undisclosed period of time, an additional $300 million in Walmart shares will also be part of the package.

Founded by Diapers.com creator Mark Lore, Jet.com publicly launched during 2015 as a membership-only retailer; basically an attempt to be the online version of warehouse clubs like Costco and Sam’s Club.

Recommended Videos

Conceptually, Jet.com was attempting to undercut Amazon by purchasing items in bulk quantities. However, Jet.com pivoted to a retail model that was open to the entire public about three months after the site initially launched. After dropping the $50 membership fee for customers, Jet.com had to increase prices on bulk items in order to stay profitable.

Related

It’s likely that Walmart is interested in a business model that competes directly with Amazon’s Subscribe & Save model. Jet.com‘s bulk purchasing option drives the price down similar to Amazon’s attempt to generate repeat orders of the same product by offering an additional discount.

Purchasing items in larger quantities has always been a common interest for the typical Walmart brick & mortar customer. By offering the same option online using Jet’s pricing model, the company may encourage brick & mortar consumers to purchase more items in bulk online and completely skip the next visit to a physical Walmart location.

jet-com
Image used with permission by copyright holder

As part of the acquisition, Walmart gets access to Jet.com‘s customer data as well as the pricing software that keeps customers coming back for more deals. Analysts believe that the Jet.com customer base is possibly more affluent than Amazon consumers. On average, household income for an Amazon customer is around $68,000 while a typical Walmart household makes about 15 percent less.

Of course, it will take more than buying Jet.com to revitalize Walmart’s stagnant online retail business. Walmart generated roughly $12.2 billion in online sales during 2014, then $12.5 billion during 2015. Comparatively, Amazon generated about $70 billion in online sales during 2014 with an increase to nearly $80 billion in 2015.

Earlier this year, Walmart launched a competing shipping service to Amazon Prime called ShippingPass. Priced at $49 per year (as opposed to Prime’s $99 fee), the service offers 2-day shipping on bestselling items listed on Walmart.com. However, the volume of items included in the two-day shipping program total up around one million, a far cry from the 30 million items included under Amazon Prime.

While Walmart previously couldn’t compete with the bevy of other perks that Prime customers receive with a subscription, this Jet.com purchase may make a difference. Before, Amazon’s perks like access to streaming video content on Amazon Instant Video, unlimited photo storage with Prime Photos, music streaming with Prime Music, and a free book to read each month in the Kindle Lending Library seemed to put the retailer head and shoulders above Walmart. Amazon also allows family members to share a Prime membership; an option that Walmart currently doesn’t allow in the ShippingPass program. But now, the tides may have changed. We’ll just have to see what becomes of this latest business deal.

Editors’ Recommendations

Topics
Mike Flacy
Mike Flacy
Contributing Editor
By day, I'm the content and social media manager for High-Def Digest, Steve's Digicams and The CheckOut on Ben's Bargains…
Intuit QuickBooks summer savings have us excited for bookkeeping and more
Intuit QuickBooks Online and Payroll Indepence Day deals used by business owner

Being honest, accounting, bookkeeping, and various administrative tasks aren't exactly what most people would call exciting, even if they own a business. It's something you have to do, but not that you necessarily want to do. But you absolutely have to stay on top of it; otherwise, things could get out of hand later, like when you're filing taxes or trying to calculate expenses. As a leader in small business fintech, Intuit QuickBooks is helping over 7 million customers worldwide do precisely that. From a startup to scaling up, the Intuit QuickBooks ecosystem delivers products and services that are a core component of small business growth. Accounting, payroll, payments, capital, and even marketing assistance via Mailchimp are just a few examples of what you can expect from a QuickBooks subscription. Thanks to its current Summer Sale, you can save a never-before-seen 70% off Intuit QuickBooks plans. That offer and these prices excite us for something that, typically, wouldn't be considered exciting.

 
These Intuit QuickBooks Summer Savings are unprecedented
This is the first time we've ever seen prices this low, and it may actually be the only time it happens. Time will tell, but the point is that you can save big on QuickBooks plans that you need for your business. The deal offers 70% off QuickBooks Online for your first three months. With Simple Start -- the base plan -- you get your first three months for just $9 per month instead of $30. That saves you $21 monthly for $63 across your initial three months of service. By comparison, the Essentials tier is only $18 per month instead of $60, and the Plus tier is only $27 per month instead of $90. If you want to splurge and go with Advanced, it's only $60 monthly for your first three months instead of $20h. Those are some incredible savings.

Read more
Grammarly should be your next AI writing partner for all things text
Grammarly-featured-image-with-creative

Not everyone is a writer, and that's okay. However, we do a lot of writing throughout our lives, from essays and school papers to dissertations, work reports, letters, emails, and beyond. Even with the advent of digital platforms, there's still a lot of writing to be done. But some tools can help significantly, like Grammarly.

Despite what the name espouses, Grammarly helps you with a whole lot more than just basic writing structure and grammar. That's thanks to an integrated AI writing assistant that can enhance your writing skills and improve the quality of the content you create. You'll get real-time suggestions about grammar, spelling errors, punctuation, and style. Ultimately, that leads to better writing from you with the complete confidence and clarity of a skilled artisan. Let's take a closer look at what Grammarly has to offer, well, everyone.

Read more
What is Microsoft Teams? How to use the collaboration app
A close-up of someone using Microsoft Teams on a laptop for a videoconference.

Online team collaboration is the new norm as companies spread their workforce across the globe. Gone are the days of primarily relying on group emails, as teams can now work together in real time using an instant chat-style interface, no matter where they are.

Using Microsoft Teams affords video conferencing, real-time discussions, document sharing and editing, and more for companies and corporations. It's one of many collaboration tools designed to bring company workers together in an online space. It’s not designed for communicating with family and friends, but for colleagues and clients.

Read more