Retailer Walmart announced this morning that it will acquire Jet.com, the site you always thought about ordering something from but never did, for $3 billion.
When it launched last year, Jet — which uses gimmicky pricing techniques like increasing discounts as you add more to your cart and reducing prices for using debit cards rather than credit cards — was the most aggressive start-up attempt yet to directly compete with Amazon, but, as Recode writes, it hasn’t been profitable since its launch. It’s been spending $20 million to $25 million on advertising, as anyone who takes the New York subway can tell you, but that’s not fueling growth as quickly as the company needs. Going under the Walmart umbrella gives Jet added resources. The two brands will remain separate.
But the move is as much about saving Walmart’s flagging online operation by giving it an online presence that isn’t, well, Walmart as it about giving Jet investors an exit: Jet CEO Marc Lore, who owns 25 percent of the company, will also run Walmart’s e-commerce division, which only makes about $14 billion in annual revenue compared to Amazon’s $99 billion. Lore previously sold his company Quidsi, which operated sites like Diapers.com, to Amazon after the two companies entered into a price war.
