Jet.com’s success has been built on its innovative approach to selling online, backed by high-quality senior management and venture investors. The firm’s unique selling point was a new take on the model pioneered by Amazon. Instead of convenience and rapid delivery, Jet.com focuses on the cost-savings consumers can make by buying in bulk and encouraging customers to shop for multiple items that can be shipped from a single distribution centre – thus cutting the retailer’s overheads and lowering prices.
Jet was founded in April 2014 in New Jersey by Marc Lore, a tech entrepreneur who had already recorded a notable success by selling his baby-product retailer Diapers.com site to Amazon at the start of the decade. The business received its initial $80m round of funding in mid-2014, and early-stage investors included Bain Capital Ventures, Accel and Mentor Tech.
Early the following year, a series B round raised $140m from investors including Google Ventures, now GV, Silicon Valley Bank and Singapore’s sovereign wealth fund Temasek. In November 2015, China’s Alibaba joined Jet’s backers in a C round – led by financial services firm Fidelity – that was worth $350m and which valued the firm at around $1bn.
Walmart’s decision to buy Jet.com was aimed, at least in part, at helping the company fight back online against Amazon – Jeff Bezos’s firm had surpassed it in value in 2015. At the time of the acquisition, which was completed in September last year, Doug McMillon, Walmart president and CEO, said: “We are looking for ways to lower prices, broaden our assortment and offer the simplest easiest shopping experience because that is what our customers want.
“We believe the acquisition of Jet accelerates our progress across these priorities. Walmart.com will grow faster, the seamless shopping experience we are pursuing will happen quicker, and we will enable the Jet brand to be even more successful in a shorter period of time. Our customers will win.”
Lore added: “We started Jet with the vision of creating a new shopping experience. I could not be more excited that we will be joining with Walmart to help fuel the realisation of that vision. The combination of Walmart’s retail expertise, purchasing scale, sourcing capabilities, distribution footprint, and digital assets – together with the team, technology and business we have built here at Jet – will allow us to deliver more value to customers.”
McMillon also described the takeover as “another jolt of entrepreneurial spirit being injected into Walmart”, and the company is clearly embracing the potential advantages that can be offered by corporate venturing. In March this year, Walmart announced the launch of a Silicon Valley incubator called Store No 8 – named after an outlet in Arkansas, where Walmart founder Sam Walton experimented with new retail ideas.
Store No 8 has been set up to enter into partnerships with startups, VC investors and researchers in areas ranging from drone delivery and autonomous vehicles to virtual reality and artificial intelligence. The incubator was unveiled by Lore, who is now Walmart’s CEO for e-commerce. He said the firms that work with Store No 8 would be “ring-fenced by the rest of the organisation and backed by the largest retailer in the world”.
He added: “We will be bringing in entrepreneurs, giving them capital and giving them the opportunity to change the course of retail five or 10 years out.”