Walmart Acquires Jet.com

Walmart.com’s online presence may be established, but it’s fairly small compared with Amazon.com. However, Walmart’s online revenue is growing too slowly for them to catch up with Amazon anytime in the near future unless they change their current trajectory. Walmart’s total revenue in 2015 was $508 billion, but e-commerce only accounted for $13.7 billion of that - or less than 3%. Even worse, Walmart’s online revenue only grew by 13% last year compared to 23% growth for Amazon. So Walmart is falling even farther behind Amazon.

That’s bad news, because retail is continuing its inexorable shift to online. And, according to Marketwatch, Amazon accounted for 60% of online sales growth in 2015.

According to the U.S. Commerce Department, the bulk of retail growth came from online retailers which grew 10.5% in 2015. So most retail growth is happening online and Amazon.com is capturing the lion’s share of that growth.

Wall Street has already taken notice. As of August 9, 2016, Amazon’s market capitalization (also known as market value) is $365 billion. Walmart’s market cap is only $229 billion.

To catch up, Walmart needs to jump-start its online business, and they must think Jet.com has something - or someone - to help them do that.

According to Walmart’s press release, the Jet acquisition will:

• “infuse Walmart with fresh ideas and expertise
• [add] an attractive brand with proven appeal, especially with Millennials
• [add] a growing customer base of urban an Millennial shopper

So Walmart may be paying a huge premium over current revenue, but they are betting that Jet will give them the technology and talent they need to achieve significant online growth.

By: Chandler Scarborough.

https://www.quora.com/profile/Chandler-Scarborough-2

http://news.walmart.com/2016/08/08/walmart-agrees-to-acquire-jetcom-one-of-the-fastest-growing-e-commerce-companies-in-the-us