What Walmart Buying Jet Means To Amazon?

About The Companies

As Amazon and Walmart, Jet.com was also a company with online and offline stores with all kinds of products that existed to make it easier for customers to access products by buying online or offline for all their favorite products in one place.  

What Walmart Buying Jet Means To Amazon?

What Walmart Buying Jet Means To Amazon?

In 2016, Walmart decided to buy Jet.com for $3.3 billion but Jet.com operations continued as usual. During this time, Walmart incorporated all the company’s clever marketing strategies, and in 2020 decided to shut down all of Jet’s previously existing online stores. Hence, there was no more Jet as users had to start shopping with Walmart instead. 

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Understanding Jet.com

Since you already know what kind of a business Jet.com was, let’s dive into why its marketing strategies were unique. Co-founded by Marc Lore, the previous owner of Diapers.com who sold it to Amazon, Jet.com was established to avail products to customers but at cheaper prices. How is this possible? Good question. It’s not like Jet.com was giving products at unreasonably low prices, no. What Jet did was availing options that made the purchase cheaper for clients. For example, the purchase of all items in one store meant lower prices than purchasing many items from different stores, Jet availed payment by debit instead of credit cards which are cheaper, and cheaper prices for clients who waived the right to return items to them after purchase. Jet was able to create a win-win situation for both its customers itself. This was one more reason for Walmart to want to buy Jet: to adopt its marketing strategies and curb serious future competition. Below are more reasons why. 

Why Else Did Walmart Buy Jet.com? 

Like most other famous e-commerce stores, Walmart is trying so hard to overpower Amazon and obtain a larger market share. Currently, while Walmart’s market share is growing, it still is 7.7% compared to Amazon’s 40.4%. So, it does make sense that instead of having another one more quickly growing competitor that was Jet, Walmart considered eliminating it. Walmart’s purchase of Jet was not just about eliminating competition, it was also about widening its customer scope. Currently, most of Walmart’s customers are, on average, around 50 years of age. While Walmart’s stores are within a walking distance of about 15 minutes from residences, the millennials, the major consumers of all products, still choose to order online because it’s cheaper. Buying Jet was a quicker step into obtaining a larger number of millennial customers for Walmart.

A Similar Incident Of Walmart’s Purchase Of Flipkart

In 2018, Walmart also bought 77% of India’s e-commerce company, Flipkart, making this the biggest e-commerce deal of the century in the world. This deal speaks a lot about Walmart’s future intentions. In 2018, Flipkart was India’s market chief. With India’s online retail business projected to grow 141% from 2017 to 2021, meaning more than $50 billion, Walmart saw an advantage worth pursuing. A way to gather a huge number of future clients. 

What Then, Did Walmart’s Purchase of Jet Mean For Amazon? 

It’s obvious that Walmart’s intention all along, after terminating Jet.com, was to eliminate the growing competitor. But initially, leaving Marc Lore to be in charge of Walmart’s online selling, meant that the company was greatly benefiting from his and Jet’s marketing tactics that had made the company a successful endeavor in its early years. The second and very important reason was that Walmart had an eye on Jet’s millennial customers who are low-income earners and thus always on the lookout for cheaper products. With Jet’s “real-time pricing algorithm” cheaper pricing was a given for Walmart.

Has Walmart’s Scheme Been A Successful One? 

Partly yes. Walmart’s intention of attaining millennial customers is slowly becoming a success, and Walmart is growing. But so is Amazon. According to Forbes Magazine, while Walmart posted revenues of $39.78 billion in 2020 and $75.00 billion in 2021, Amazon posted $404.4 billion and $468.8 billion for the same years. This is all partly thanks to Amazon’s use of enhanced AI and analytics to understand and predict change in consumer behavior to take worthy action that enable it to stay the consumer’s top choice in their minds. Amazon is also consistently evolving ideas like Amazon Prime that Walmart immediately went head-to-head with using Walmart+. Walmart is yet to master these and more tactics as well as create its own. 

Conclusion

We, the consumers, will always benefit from such competition because as they fight for clients, more promotion benefits are open for us. With the buying of Jet, Walmart was successfully strengthening its foundation, and if Amazon was to relax a bit, who knows what would happen? But with the rising fuel prices, both companies may face bigger revenue blows than they already are. 

What Walmart Buying Jet Means To Amazon?

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