A deal between Wal-Mart Inc. and Jet.com will have the latter being purchased for a reported $3.3 billion.
Jet.com is a start-up competing with Amazon’s dominance in the online retail marketplace. The purchase by Wal-Mart is an obvious move to contend with Amazon in its online sales dominance. Wal-Mart has faced troubles in the past with integrating their large network of physical stores and distribution centers and their online shopping experience. Wal-Mart has said the two websites will continue to operate independently of one another, but improvements to both websites are to be expected.
Jet.com works differently from e-commerce stores. Making its name on offering the best prices, the website offers discounts to shoppers based upon logistics. Jet.com connects consumers with retailers based on proximity. Finding a store located near the shopper with all the items in stock saves money for sellers one shipping and handling charges. Those discounts are then passed on to the consumer, especially when shopping in bulk. If Amazon is like Wal-Mart, then Jet.com is the Costco of online shopping.
Whether or not Wal-Mart can overtake Amazon as the dominant online retail seller, consumers can look forward to cheaper products delivered faster than ever as the two companies fight for dominance. New entrants into the e-commerce marketplace will continue to drive competition and innovation in the field. Over the past several quarters, Wal-Mart has been offering more and more products online. Those advancements, however, have only gown the e-commerce sales of Wal-Mart by 7% in the most recent quarter, less than half of the overall sector.
Read more here: “Wal-Mart to Acquire Jet.com for $3.3 Billion in Cash, Stock” (Sarah Nassauer, WSJ)