stayontheblack.com

Science

Wal-Mart pays again for past mistakes

Walmart Shareholders 2016 distribution center

Wal-Mart has a major e-commerce operation, but online sales growth has been decelerating and is now lagging the industry.

The deal may help Walmart reinvigorate growth in its online shopping business, which has slowed in recent quarters. They will also pay an additional $300 million in shares over time.

There are a few specific things Walmart will acquire in the Jet.com deal that might aid in the company's fight to fend off Amazon.

"The impact on Amazon will be fairly benign". Traditional store-based mass retailers such as Wal-Mart, Target Corp. and Costco Wholesale Corp. have been struggling to fend off Amazon's momentum in online shopping.

Walmart agreed to buy online shopping site Jet for $3 billion, according to a statement from the company Monday. In the United States, Walmart increased its total market coverage for grocery pick-up to almost 40 by the end of May, up from 22 markets at the beginning of 2016.

McMillon said Wal-Mart customers likely will see lower prices and new brands aimed at millennials that have been carried by Jet.com. As for perhaps merging the two sites eventually, McMillon said Wal-Mart wants to be thoughtful about how it approaches that. The deal comes a little more than a year after Lore co-founded the company with Nathan Faust and Mike Hanrahan as a competitor to Amazon and even Walmart itself.

The Jet management team has had experience battling Amazon through Quidsi and its brands such as Diapers.com. From 2009 to 2012, she was an award-winning syndicated columnist for a number of daily newspapers from NY to Texas. Earlier media reports suggested it could be Lore.

The world's largest retailer is paying top dollar for an e-commerce startup in its bid to take on Amazon.

"The $3 billion purchase price seems pretty steep for a business that may not have made any money and probably won't for some time". Jet said it is adding about 400,000 new shoppers monthly and processes about 25,000 orders on a daily basis.

Wal-Mart says it will incorporate some of Jet.com's "smart" technology that lowers prices in real time by looking for ways to cut costs.

But Walmart's online growth, which grew 12% past year (versus Amazon's 25%), has been hard to come by.