Credit Cole Wilson for The New York Times
Jet.com, an online store that sells a wide range of products like groceries, books, jewelry and appliances, agreed to sell itself to Walmart Stores for $ 3.3 billion as they both seek to take on a mutual competitor: Amazon.
The deal incorporates $ 3 billion to be paid to Jet.com stakeholders in cash, a portion of that to be distributed over time, while $ 300 million will be paid in Walmart stock over time, according to a statement released by the companies on Monday. The companies did not specify the length of the payment period.
Before Jet.com even opened for business, the company had raised hundreds of millions of dollars from venture capitalists, who believed the start-up had the potential to take on Amazon, the No. 1 e-commerce giant. Founded in 2014 and based in Hoboken, N.J., Jet.com started selling products about a year ago through a special algorithm that lowered prices for consumers based on how much they purchased.
The companyâs founder, Marc Lore, came with a good track record: He had started Diapers.com, which was sold to Amazon in 2010.
For Walmart, the acquisition â among the retailerâs largest ever â is a way to further pivot from brick-and-mortar to online, potentially attracting more customers who are seeking to buy in bulk. Analysts are skeptical that the deal will help Walmart fend off Amazon altogether, but they say it could strengthen the retailerâs online presence.
âAs we believe âcatchingâ Amazon online is an unrealistic goal for any brick-and-mortar retailer, Walmart now has a definite leg-up on its competitors in the very important race to be number 2 online,â Charlie OâShea, Moodyâs lead retail analyst, wrote in a note on Monday.
Under the deal, Walmart and Jet will continue to operate as distinct brands. Though subject to regulatory approval, the transaction has been approved by the boards of both companies and is expected to close this year.
In a mere two years, Jet.com raised more than $ 500 million from prominent venture capital investors such as Fidelity Investments, Bain Capital Ventures and New Enterprise Associates. The company quickly reached a $ 1 billion valuation, achieving so-called unicorn status at a rapid pace.
But the companyâs path was not always smooth. Jet.com began quickly burning through the cash it had raised, spending freely on hiring and marketing. It also dropped its $ 50-a-year membership fee to bring more customers on the site, a move that subtracted a revenue source for the company.
Walmart is optimistic that the companies can benefit each other. In Mondayâs statement, Doug McMillon, Walmartâs president and chief executive, said that the deal would help his company lower prices for its customers.
âWalmart.com will grow faster, the seamless shopping experience weâre pursuing will happen quicker, and weâll enable the Jet brand to be even more successful in a shorter period of time,â Mr. McMillion said. âItâs another jolt of entrepreneurial spirit being injected into Walmart.â