Did Walmart just flush $3 billion down the toilet? Retail giant quietly announced it will discontinue Jet.com, which it acquired for $3B in 2016
Nickie Louise
Posted On May 19, 2020
Back in November 2019, Walmart announced the shutdown of Jet.com, an online-only marketplace the retailer giant acquired when it was just over one year old for $3 billion. A year earlier, the Jet.com service was launched amid much fanfare. Jet even opened a 200,000-square-foot fulfillment center in the Bronx, and used acquired unit Parcel to handle deliveries. Walmart decided to shut down Jet.com due to competition and struggle to bring the operations into profitability.
Now, according to news first reported by TechCruch, Walmart quietly announced in its quarterly report dated May 19, 2020, that it would be discontinuing Jet.com, the online-only marketplace that it acquired when it was just over one year old for $3 billion in 2016. The retail giant tried to put a positive spin on the announcement saying:
Due to continued strength of the Walmart.com brand, the company will discontinue Jet.com. The acquisition of Jet.com nearly four years ago was critical to accelerating our omni strategy. Sam’s Club comp sales1 increased 12.0%, led by in-club transactions. eCommerce sales grew 40%. Reduced tobacco sales negatively affected comp sales by approximately 410 basis points. Net sales at Walmart International were $29.8 billion, an increase of 3.4%. Changes in currency rates negatively affected net sales by approximately $1.3 billion. As a reminder, with the exception of Canada, all other international markets report on a one month lag.
Jet.com was co-founded in 2014 by Marc Lore (who had previously sold Diapers.com to Amazon.com), along with Mike Hanrahan and Nate Faust. The startup went on to raise $820 million over four venture rounds from GV, Goldman Sachs, Bain Capital Ventures, Accel Partners, Alibaba Group, and Fidelity. Its website was formally launched in July 2015. It later became a subsidiary of Walmart in Fall 2016.
In July 2015, the Wall Street Journal ran a piece about a test purchase on the site. According to the report, Jet had sold the newspaper 12 items for $275.55 that had cost the site $518.46 – losing $242.91 on the transaction.
