Walmart’s Purchase of Jet.com: What Does it Mean for Amazon?

Amazon.com has grown from a tiny online book seller to a behemoth in the eCommerce space. How did they manage to get as far as they have? Firstly, they managed to weather the dot com bust of the early 2000s – something other eCommerce companies (ala pets.com) could not do. But it was in its penchant for efficiency and innovation that it truly created a competitive advantage.

0717lore09che

As the years have progressed, Amazon is no longer a blip on the radar of “traditional” retailers. Possibly late to the party, Walmart has been making moves to gain more foothold in the eCommerce space, but its $13.5 billion in eCommerce sales pales in comparison to Amazon’s $79.3 billion. Considering the gargantuan difference between the two, Walmart needed a big shot in the arm to get itself better positioned in the eCommerce space… and it just got it.

Jet.com, which only launched just about a year ago, has already done $1 billion in sales. The company was created with a specific purpose – go after Amazon. Marc Lore, formerly the CEO of Quidsy, which was purchased by Amazon, left Amazon only weeks before getting started on Jet.

The basic premise of Jet.com was to allow shoppers to purchase from multiple vendors, while putting all the items in a single box – lowering costs for the consumer while encouraging them to buy more, rather than impulsive purchases.

Walmart, the largest retailer in the world, purchased Jet.com (a company just barely 1 year old) for $3.3 billion. There is no one in the business world that doesn’t think was a move to directly go against Amazon and push for the #1 online retailer spot. While they have a long ways to go, this is a huge step towards that goal.

A big hurdle that Walmart has to deal with in terms of breaking further into the eCommerce space is its appeal to the millennial crowd – it’s just not very cool. Jet.com, on the other hand, has the appeal of the new, shiny startup that millennials tend to gravitate towards.

Jet.com was built by Marc Lore, who used his experience at Quidsy as well as at Amazon, to build a team and scale it at a lightening speed. That team, process, and infrastructure is now under the auspices of Walmart.

Should Jeff Bezos be losing sleep? Actually, yes. While Jet.com won’t be folded directly into Walmart – it will remain a separate entity – it’s extremely likely that it will eventually be combined in some more formal way in the future. Once that happens, Amazon will need to watch their backs.

Bringg Team

Get delivery & logistics news and insights