If completed, the acquisition could give Walmart the ecommerce muscle it needs to overtake Amazon.
Jet.com, which sells household goods and groceries, is just one year old.
But it has been growing rapidly — adding approximately 350,000 customers per month — by offering cheaper prices than Amazon and free shipping on all orders over $35.
By comparison, Amazon charges $99 annually for free two-day shipping.
Walmart has been investing heavily in its online business in an attempt to catch up to Amazon.
But it has a long way to go. Walmart’s online sales were $13.7 billion in fiscal 2015. By comparison, Amazon’s online and electronic device sales in 2015 were $99.1 billion.
Walmart has one key advantage over Amazon: It has tons of distribution centres and stores that can act as distribution centres across the US.
However, it has been slower than Amazon to offer fast and free shipping for online orders.
That’s where Jet.com can help Walmart.
“While Walmart does have an e-commerce offer, it is somewhat jumbled and unfocused which makes it hard for the company to compete with the likes of Amazon in specific areas like household essentials,” Neil Saunders, CEO of retail consulting firm Conlumino, wrote in a note to clients.
“To an extent Jet remedies this and would give Walmart a much more focused and powerful offering and platform with which to compete against Amazon.”
To play catch-up to Amazon, Walmart recently shortened the shipping window for members of ShippingPass, the company’s free shipping program meant to rival Amazon Prime.
ShippingPass costs $49 a year, while Amazon Prime costs $99 annually.
Like Amazon Prime, ShippingPass gives subscribers access to more than 1 million products online that they can have delivered to their doors within a couple of days.
There’s no minimum-order requirement to qualify for the free two-day shipping. The membership comes with free returns online and in stores.
Without ShippingPass, Walmart customers have the option to choose between “rush” one-day shipping, which can cost at least $14 per item, or “expedited,” “standard,” and “value” options, which take between two and seven days and cost about $5 to $8. Walmart offers free pickup at stores.
Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.
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