Walmart showed it’s serious about growing its online presence when it bought Jet.com for $3.3 billion last week, the highest price tag for any US e-commerce startup ever.
Given Jet.com’s only two years old and likely nowhere near profitable, that’s a hefty price to pay.
But Walmart CEO Doug McMillion shared two things about Jet.com that convinced him to go the extra mile during Thursday’s earnings call: its discount technology, and its CEO Marc Lore.
More specifically, McMillion likes Jet.com’s technology that allows customers to get higher discounts as they purchase more items. Jet.com is known for its unique discount policy that rewards additional discounts to customers who buy more items, opt out of free returns, or pay by debit card (instead of credit cards). He said:
“One of the things we like about the technology they have developed is that it rewards customers in real-time with savings on a basket of goods and puts them more in charge of the price they pay. This empowers customers in a way that is true to the spirit of Walmart.
When customers build a basket of goods online rather than ordering one item at a time, shipping economics are in their favour and ours. Walmart’s advantage has always been in providing the lowest prices on a basket, and Jet has created a unique way to deliver the lowest cost basket online.”
McMillion also praised Lore, who Walmart reportedly tried to add to its team six years ago by purchasing his then startup, Quidsi, which eventually sold to Amazon. Lore is now in charge of running both Jet.com and Walmart’s online business as its president and CEO of e-commerce.
“Marc is a passionate merchant and innovative thinker who will definitely add value to our business,” McMillion said.
Perhaps the clearest sign of McMillion’s commitment to Lore could be seen in the fact that Walmart’s requiring Jet.com’s founder to stay with the company for five years, not the typical two years, to fully realise his payout, as Recode’s Jason Del Rey previously reported.
Lore will report directly to McMillion once the acquisition is complete, making him one of Walmart CEO’s closest lieutenants.
“I look forward to working with him,” McMillion said of Lore during the call.