Jet.com CEO Marc Lore will lead Walmart’s combined online business.
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In a bid to compete against the e-commerce giant Amazon, Walmart announced on Monday that the company would buy e-commerce startup Jet.com for $3.3 billion. $ 3 billion will be paid in cash and the rest in shares, reported Bloomberg.
The deal will also make a change in the leadership of the Walmart’s online business with Marc Lore, the CEO of Jet.com taking charge of the company’s combined online business replacing Neil Ashe who has been with the company since 2012. However, Jet.com will retain its brand name.
“This is Walmart being even more committed to winning in e-commerce,” Doug McMillon, president and CEO of Walmart was quoted as saying by Tech Crunch. “What [Lore] has built at Jet has applications at Walmart. The job [he will be taking over] is more focused on U.S. e-commerce and that makes sense to us,” he added.
With the deal, Walmart is signaling that the company is trying to expand its online business and compete against its rival Amazon. Earlier there were reports that the company was in talks with the startup officials to fix the deal.
Recently, Walmart had opened two offices in Silicon Valley, built large e-commerce distribution centers, and hired thousands of employees to make inroads into the e-commerce market which is dominated by Amazon.
Started in 2015, Jet.com has reached $1 billion in run-rate Gross Merchandise Value (GMV). They are adding 400000 new customers monthly to its base and receiving 25000 daily process orders. The startup was expected to be profitable by 2020.
“We’re looking for ways to lower prices, broaden our assortment and offer the simplest, easiest shopping experience because that’s what our customers want,” said McMillon in a statement.
“We believe the acquisition of Jet accelerates our progress across these priorities. Walmart.com will grow faster, the seamless shopping experience we’re pursuing will happen quicker, and we’ll enable the Jet brand to be even more successful in a shorter period of time. Our customers will win. It’s another jolt of entrepreneurial spirit being injected into Walmart.”
Walmart has 11,527 stores in 28 countries and it serves 260 million customers each week. The company that employs 2.3 million people worldwide had made revenue of $482 billion in 2016 fiscal. But its online sales were about $14 billion last year which is only 14 percent of Amazon’s revenue.
“Walmart Labs is alive and well. It will continue to power the technology behind our e-commerce capabilities across stores, online and mobile around the world. It’s important to note we have e-commerce sites in 11 countries under the Walmart, Sam’s Club and other brands — United States, United Kingdom, China, Brazil, Canada, Japan, Mexico, Argentina, India, Chile, and South Africa. Jet.com brings assets and capabilities that complement our existing e-commerce business,” a spokesperson told Tech Crunch.