Brief: Walmart just spent $3b to buy an unprofitable, 2-year-old ecommerce startup

A Walmart in the US. Photo credit: Mike Mozart.

• Walmart, the largest retailer in the world by revenue, has purchased online marketplace Jet.com for US$3 billion in cash and stock. It’s the largest acquisition ever of an ecommerce company.
• The acquisition is aimed at helping Walmart catch up with Amazon in online shopping. It only does US$14 billion in annual online sales compared to Amazon’s US$99 billion.
• Jet.com founder Marc Lore, who started Diapers.com and sold it to Amazon for about half a billion dollars, could make as much as US$750 million from the deal. He’ll now run Walmart.com.
• The startup is estimated to be on pace to achieve US$500 million in annual revenue, though it’s unprofitable. Jet.com tried but abandoned a membership model before launch. It then pivoted into trying novel ways to offer consumers discounts.

Source: Recode