Walmart said this morning that it is buying Jet.com, an e-commerce startup, for $3.3 billion in cash and stock. Walmart and Jet will remain separate brands, the companies said in a release. The deal is subject to regulatory approval and expected to close this year.
By acquiring Jet, Walmart is hoping to jumpstart its flagging online shopping operations and stem losses to Amazon. Jet is a savvy tech startup that launched last July with dreams of taking on Amazon and quickly surpassed a $1 billion valuation. Its CEO, Marc Lore, is a well-known e-commerce veteran who made his name selling Quidsi, the parent company of Diapers.com and other niche retailing sites, to Amazon in 2011 for $545 million. Lore will reportedly take a senior leadership role on Walmart’s e-commerce team as part of the deal.
Jet is on track to handle $1 billion in total sales this year and says it adds 400,000 new shoppers each month. Growth in Walmart’s global e-commerce sales has declined steadily over the last two years.
“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,” Walmart CEO Doug McMillon said in a statement. “We believe the acquisition of Jet accelerates our progress across these priorities … It’s another jolt of entrepreneurial spirit being injected into Walmart.”
The deal marks the largest-ever acquisition of an e-commerce startup, according to a note sent Monday by venture-capital research firm CB Insights. Lore is now also behind two of the biggest e-commerce acquisitions since 2009, per data from CB Insights.
Walmart’s purchase of Jet just over a year after its launch is likely something of a comedown for Lore, who wanted five years to scale the business into an e-commerce mainstay. But it’s a clear win for Jet’s investors. Jet’s prospects have looked iffy ever since it scrapped a membership model last fall and bet everything on attracting customers with the lowest prices. It spent between $20 million and $25 million a month on advertising and got plenty of people to try the site, but had a tougher time retaining them.
Recode reported over the weekend that some of Jet’s investors “thought the chances of a successful outcome were slim to near-impossible.” Now they get a big payday.