The official announcement of Jet.com’s acquisition by Walmart came on Monday, as did the word from a Walmart spokesperson that Jet will be staying in New Jersey, where the team that brought it to this stage is located.
This is good news for the local economy in Hoboken, where Jet is located, and for Jet employees. It’s even better news for New Jersey, where Jet began as a high-flying startup and continues to stand out as a success story.
Jet was founded by Marc Lore, who also cofounded Quidsi (Jersey City) the parent company of Diapers.com (Jersey City), which was sold to Amazon. The fellow cofounders of Jet are Mike Hanrahan and Nate Faust. The founders began by using Costco’s membership model, but they pivoted to providing customer discounts through a “smart” shopping cart.
The startup was acquired by Walmart in a $3 billion cash deal. A portion of the $3 billion will be paid over time. Additionally, $300 million of Walmart shares will be paid out over time as part of the transaction.
“We intend to have the brands operate distinctly and independently, under their existing names,” said Randy Hargrove, director of national media relations for Walmart. “We plan to operate Walmart.com and Jet.com with distinct positioning. We think that will help us reach more customers,” he told us.
“From our standpoint we will work with Jet.com to optimize and streamline our respective supply chains. The acquisition is going to help empower shoppers with additional savings, and we are going to look at increasing assortments and brands and enhancing customer service with precise delivery,” Hargrove said.
“The acquisition will bring on an experienced and proven leadership team that is going to help infuse our company with new ideas and expertise,” he added. “It’s an attractive new brand that will come into the Walmart family with proven appeal.”
Jet is moving with speed, said Hargrove. “They have 12 million skews in their first year, and they have $1 billion in run-rate gross merchandise value (GMV).
“The announcement was a definitive agreement for us to acquire Jet. We will be looking to obtain the necessary regulatory approval to complete the transaction. Once the transaction is complete, we will look to see how we can work together and see the integration opportunities that exist.
“We believe Jet will bring capabilities that complement our existing e-commerce business. Jet can help Walmart, but Walmart can help Jet as well,” he said. “Jet uses best-in-class technology, and we are going to look at the integration of that: how do we combine technologies and the customer base at Jet.com with our offerings to help drive growth and give customers better value in how they shop.”
When Walmart made the announcement, Doug McMillon, president and CEO said “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.com will focus on delivering the company’s “everyday low pricing” strategy, while Jet will continue to provide a unique and differentiated customer experience with curated assortments, the press announcement said. Walmart and Jet will leverage innovative technology solutions from both companies to develop new offerings to help customers save time and money.
“We started Jet with the vision of creating a new shopping experience,” Lore said in the release. “Today, I couldn’t be more excited that we will be joining with Walmart to help fuel the realization of that vision. The combination of Walmart’s retail expertise, purchasing scale, sourcing capabilities, distribution footprint, and digital assets – together with the team, technology and business we have built here at Jet – will allow us to deliver more value to customers.”
After the deal closes, Lore will take over the leadership of Walmart.com, said McMillon during a conference call on Monday, according to a Wall Street Journal report. Walmart’s top online executive, Neil Ashe, will be leaving the company.