Walmart’s Desperate $3.3 Billion Acquisition of Jet.com Fails. But it Now Discloses its US Online Sales, and They’re Big
Walmart’s Desperate $3.3 Billion Acquisition of Jet.com Fails. But it Now Discloses its US Online Sales, and They’re Big by Wolf Richter for Wolf Street
Ecommerce is an existential threat to Walmart, and it’s furiously trying to get on top of it, whatever the cost may be.
Walmart, determined in an existential sense to become a factor in ecommerce, has been spending vast sums of money to get there, including blowing billions of dollars on acquisitions of ecommerce startups. But the mind-boggling $3.3 billion purchase in 2016 of Jet.com – an over-hyped online retailer that had started doing business in 2015 – wasn’t the ticket.
Walmart conceded as much Wednesday afternoon. The admission was likely prodded by an investigative report by Reuters that appeared at the same time, detailing to what extent sales at Jet.com had shrunk, and how Walmart.com had been quietly absorbing Jet’s people and winding it down. $3.3 billion down the tubes.
Walmart’s ecommerce business is already huge, and it’s now disclosing the actual dollar figures in its SEC filings. During the quarter ended April 30, its ecommerce sales in the US jumped by 34% year-over-year to $4.3 billion (10-Q filing).
At this rate of growth, its ecommerce sales in the US will hit $5.8 billion in the same quarter next year. By comparison, Macy’s total sales, brick-and-mortar plus ecommerce, fell to $5.5 billion in the quarter despite its thriving online business. Walmart went from on online non-entity a few years ago to the third largest online retailer in the US in 2019, according to eMarketer estimates, behind only Amazon, eBay, and Apple.
Its online business is growing far faster than that of Amazon. But for Walmart, that massive $4.3 billion in US online sales last quarter was only a 5.3% sliver of its total US sales of $80 billion.
By contrast, other brick-and-mortar retailers that now disclose actual online sales (not many do), Nordstrom and Neiman Marcus get over 30% of their total sales from ecommerce. Walmart has a long way to go. But Jet.com wasn’t it.