NEW YORK (AP) — Wal-Mart said Monday it has completed its deal to buy fast-growing online retailer Jet.com for $3 billion in cash plus $300 million in stock, an acquisition aimed at helping the world’s largest retailer attract younger and more affluent customers to drive online sales.
The hefty price tag shows how heavily Wal-Mart is willing to invest as it tries to increase online sales that totaled $13.7 billion last year — still just a fraction of the company’s total annual revenue. Wal-Mart has said it will incorporate some of Jet.com’s “smart technology” that lowers prices in real times by looking for ways to cut costs. Wal-Mart and Jet.com will operate as separate brands, though.
As part of the deal announced in early August, Jet.com co-founder and CEO Marc Lore will oversee both that site and Walmart.com and will report to McMillon. Lore brings to the role a rich e-commerce resume as founder of Quidsi, the parent Diapers.com, which was bought by Amazon for $500 million in 2010.
In a Wal-Mart blog post on Monday, CEO Doug McMillon wrote, “Wal-Mart and Jet.com obsess about saving customers time and money. By joining forces, we’ll be better at doing both, creating seamless shopping from app to site to store.”
On his Instagram account was an image of Jet’s purple T-shirt with a note saying, “I’ve been waiting a month to put on this shirt.”
Jet’s pricing technology is built on an algorithm that determines which sellers are the most efficient in value and shipping and adjusts prices based on what items are in the checkout cart as well as how far the desired products are from the shoppers’ home. So shoppers are encouraged to add more to build a more efficient cart and buy items labeled “smart cart” for more savings.
For Jet.com, which had been pouring money into splashy TV ads and other marketing, being owned by Wal-Mart should accelerate its path to profitability.