Walmart buys Jet.com: What it means for Amazon?
- by eSellerHub
Walmart is taking over Jet. com for $3.3 Billion
But then, what does this actually mean for the world’s largest retailers, Jet, and Amazon in the US eCommerce industry?
Amazon racked up over $99 Billion in revenue last year; Walmart in comparison did a little below $14 Billion for the same period. Clearly, in comparison to the $450 Billion odd business, it does yearly, it does not seem noteworthy.
Also, the online sales growth for Walmart has been on the downside. Walmart has been known to have a very limited set of merchants (around 600) on its online portal, especially considering the fact that it started following a marketplace model in 2009. To put things in context, Jet.com started just over a year ago and already has a robust marketplace model with 2400 merchants.
In this scenario, taking over Jet could add more muscle to Walmart’s armory, if the largest retailer plans to take on the largest ‘online’ retailer in the US.
The retail eCommerce industry in the US is already a $400 Billion industry and is expected to grow to over $600 Billion by 2020. If the deal, means being 2nd only to Amazon in the race, then that would definitely be something that would get Walmart interested.
It is widely believed that Jet will continue to have its own existence and brand, at least for now. Considering that, the biggest challenge that Jet faces currently is scaling up, in order to be a viable proposition.
A partnership like this seems perfect for both Jet and Walmart as it is likely that Walmart would benefit from the much more robust and sophisticated eCommerce structure that Jet has built and Jet, in order to directly compete with Amazon, would benefit from the huge stack of cash that Walmart brings on the table.
For Amazon though, everything seems to be going right. It has been doing phenomenal business for the last 5 quarters. Net sales have grown by over 30% for the 2nd quarter when compared to the first, profits have been record-breaking and expertise and dominance have been increasing consistently. So the big question is, will this deal affect Amazon in any way?
A simpler answer would be, no. But again, things are not just black and white. In other words, there seems to be no immediate threat to Amazon from this deal. But what this game-changing deal does is, it makes the playing field a lot more interesting for the time to come.