What the Jet Acquisition Means For Wal-Mart’s E-Commerce Strategy
Amazon had 6x revenue of Wal-Mart in the e-commerce market last year. AMZN ($82.8B) WMT ($13.6B). WMT e-commerce growth has decelerated.
WMT needed a shot in the arm to boost their e-commerce presence & take on AMZN as the market shifts from brick & mortar to online shopping.
The $1T market opportunity in the next 10 years will undoubtedly be controlled by AMZN, plenty of room for WMT to sit comfortably at #2.
Jet acquisition makes perfect sense. WMT has been the industry standard for supply chain management & logistics for decades.
WMT fulfillment & command over their suppliers has remained unmatched as a brick & mortar powerhouse.
Now w/ the rise of online shopping they need to start altering their supply chain to cater to the rapidly growing e-commerce market.
Enter Jet & Marc Lore.
Jet’s logistics & experience in the e-commerce market will help guide WMT to efficiently utilize their distribution assets.
This will allow them to directly compete with/beat AMZN’s low shipping costs.
Combining WMT’s physical assets w/ Jet’s delivery & pricing will allow them to cut into AMZN’s share of the market.
Jet’s “buy in bulk” strategy can change the dynamics of e-commerce shopping or open up a new segment in the market.
They could effectively become the “Sam’s Club for e-commerce.” (See similar startup Boxed).
For years Wal-Mart has been trying to rebrand its e-commerce business while maintaining the strong brand recognition of it’s brick & mortar.
When you hear “Wal-Mart”- what do you think of? A physical SuperStore.
When you hear “Amazon or Jet.com”- what do you think of? Online shopping (Or maybe planes).
Marc Lore & team will help build a brand around e-commerce for WMT. WMT can still focus on maintaining the strength of brick & mortar.
W/ combined resources & Marc Lore’s ability to quickly scale e-commerce brands WMT can begin to make the push into AMZN’s market share.
WMT Labs has been investing in mobile payments, drones, robotics, etc. Jet will be the keystone to bring all of this tech together.
WMT finally has the ability to be a powerful #2 in the e-commerce space, but that is all that they will ever be. AMNZ is too big, too quick.
While WMT has been sitting on their hands, AMZN has been perfecting the tech for years. Doesn’t matter if Jet is 4–5% cheaper.
While WMT is trying to build something recognizable, AMZN is building an ecosystem around shopping- making it a part of everyday life.
The Echo, drone delivery, dash buttons, etc. are making people’s lives more convenient, saving them time & money.
Meanwhile AMZN is advertising & collecting data to advertise even better than before. This keeps building on itself. Learn, advertise, buy…
Learn, advertise, buy. AMZN’s ecosystem cannot be replaced by a retailer that looks like AMZN aka Wal-Mart. They won’t have the data.
I love this acquisition, but let’s not get ahead of ourselves. AMZN remains king- by a long shot. WMT will be #2.
This acquisition should prove how strong AMZN is. Like Hunter Walk said: