Jet.com, an online retailer startup has agreed to be bought by the retailer giant Wal-Mart in a deal valued at $3.3 billion. Wal-Mart had been trying to break into e-commerce, from its traditional brick-and-mortar retail business for more than a decade. Since 2000, Wal-Mart has been trying to build an on-line presence, with Walmart.com, and hired online executives, such Neil Ashe. It built its own e-commerce to compete against the leaders, especially Amazon. Amazon's growing
dominance of on-line retailing has been threatening Wal-Mart's overall business. In recent years, shoppers have been increasingly switching from visiting brick-and-mortar stores to virtual shopping. Neil Ashe will leave Wal-Mart and Jet.com founder, Marc Lore, will take over as the new Walmart.com leader.
With the deal, Wal-Mart appears to be walking away from its initial e-commerce strategy, launched 15 years ago when it built Walmart.com. As Walmart.com grew, Wal-Mart opened large-scale distribution centers across the U.S. to fulfill online orders and hired a large staff out of San Bruno, California, dedicated to e-commerce.
Meanwhile, Amazon has continued to grow its share of the retail business at a faster rate. Amazon achieved these high rates with advanced technology, faster delivery, a huge selection, and aggressive discounting.
Wal-Mart online business growth has slowed down for nine straight quarters. In the most recent quarter, While Amazon's sales grew 31% on close to $107 billion, Wal-Mart online sales only grew by 7% out of $14 billion.
Hence, observe believe that Wal-Mart’s purchase of Jet.com may be a catch-up game, as it seeks to stop Amazon's momentum or at least walk in Amazon's footsteps.
Based on statements from Wal-Mart CEO Doug McMillon, walking in Amazon's footsteps may be the most likely strategy. “It’s another jolt of entrepreneurial spirit being injected into Wal-Mart,” CEO McMillon said in a news release on Monday. According to Wal-Mart, the acquisition of Jet.com enhances Wal-Mart's capabilities with advanced pricing software, a network of third-party sellers, and a new brand popular with millennials.