Walmart buys Jet.com to compete in a digital world
Walmart, the world’s largest retailer, has acquired two-year-old online retailer Jet.com for $3.3 billion, the most ever spent on the acquisition of an e-commerce company.
Even though e-commerce currently represents only 3 percent of its total revenues, which were $482 billion in 2015, this acquisition reinforces the idea that even a retailer as big as Walmart cannot ignore the trend for more and more physical shopping to shift to virtual channels.
Cutting out the siloed experience
Acquiring a successful e-tailer like jet.com is the quickest way for Walmart to gain altitude in an omnichannel world and create a more agile, integrated business model.
The move represents a fundamental shift to accommodate multiple points of sales, seamlessly integrated across channels and stores, and leave behind the perception that e-commerce is an afterthought in Walmart, with its online operations hindered by lack of scale and siloed systems.
Turn up the technology
As a retailer that boasts of its ´always low prices´ thanks to its highly evolved logistics (from its sourcing capabilities and buying power to distribution network), Walmart has already adopted several technological innovations that help move it towards a truly omnichannel experience. It has advanced inventory management and distribution, and offers mobile payments and premium fulfillment memberships.
But there is plenty of room for improvement, and a truly omnichannel platform will help Walmart integrate its operations and reinforce its branding and unify the experience consistently across all channels.
Jet.com offers a more sophisticated e-commerce pricing engine which takes into account factors like basket size, shipping options and product proximity to customers to offer lower prices.
Jet.com would help Walmart marry a more profitable pricing strategy with omnichannel logistics to enhance the shopping experience across all its stores. Walmart would also gain valuable customer data in the acquisition, which could help them enhance their efforts in social selling, loyalty rewards and customer-targeted promotions.
Jet.com has a growing customer base of urban and millennial shoppers with more than 400,000 new shoppers added monthly and an average of 25,000 daily processed orders, according to RIS News.
In a move that will undoubtedly improve Walmart’s appeal to Millennials and Gen Z shoppers, the combined power of Jet.com and Walmart promises to provide a more curated, personalized experience culled from its immense world of products, seamlessly accessible and deliverable across its Walmart app and stores.
Competitive edge isnt about size
Regardless of their size or sector, all bricks-and-mortar retailers need to reevaluate their own IT solutions and considering adopting a more agile technology solution to cope with an integrated omnichannel world.
Walmart’s move shows that omnichannel is a trend that is here to stay, and that even strong bricks-and-mortar giants like Walmart see omnichannel as a smarter, more robust way of handling large inventory movements while providing customers with a wider assortment of products, a better shopping experience, and additional flexible sales points.
Retailers of all sizes can gain the same competitive edge as Walmart by adopting their own omnichannel strategy, starting with integrated e-commerce, inventory management, technology-assisted sales, and order fulfillment capabilities, followed by customer data collection and customer personalization strategies.