Walmart Transformed by Jet.com

When Bentonville-based Walmart acquired Hoboken-based Jet.com in 2016, the buzz was about Walmart diversifying its revenue streams by reaching toward the upscale, urban consumer. The notion that Jet.com would remain a stand-alone business, however, was always fantastical. For Walmart, the only point of the $3.3 billion acquisition was for Walmart to catapult itself into the major league of e-commerce.

Walmart achieved that goal. The company announced this week that it was shutting down Jet.com. Using a bolt-on deal to build market share worked handsomely for the middle-class monolith. In the first quarter of this year—turbo-charged by the pandemic—Walmart saw its online sales increase by 74% year-on-year. Many of those buyers were first-time users of the online portal; we suspect they will stay around for a while. Skeptics may want to visit walmart.com to discover, well, the unexpected.

While Jet.com held important client and technology assets at the time of the Walmart acquisition, the startup was still grounded. It was apparently “bleeding money,” despite successful funding rounds with marquee-level venture capitalists. A constant-and-debilitating demand for capital was derailing the company’s growth vision. In hindsight, Jet.com may have benefited heavily from tech-related buzz when it opened its online portal in 2015.

Those entrepreneurs looking for capital may want to keep this case study on file. Management at Jet.com benefited handsomely from Walmart’s acquisition, while giving the founders plenty of room to maneuver in an expansive sandbox. Marc Lore, former head of Jet.com, now runs Walmart’s entire ecommerce division. His personal and business prospects may now be far better than they ever were as an independent entrepreneur running a cash-starved retail startup.

Our Vantage Point: The Walmart purchase of Jet.com played out better than most could have expected. For entrepreneurs, the lesson here is that enterprise capital can be an important alternative when searching for cash.

Learn more at Axios

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