Illustration: Aïda Amer/Axios
Walmart yesterday announced plans to shutter its Jet.com e-commerce brand, less than four years after buying it for $3.3 billion.
Under the hood: Appearances can be deceiving. Not only was this deal not a failure for Walmart, but it arguably was the retail industry's most successful acquisition ever of a tech company.
History: Jet.com was still pretty embryonic when Walmart agreed to buy it in August 2016.
- The company had only been founded two years earlier, and publicly launched just one year earlier, with an ambitious goal to take on Amazon.
- It was something of a revenge play by founder and CEO Marc Lore, after Amazon used anti-competitive practices to force an acquisition of Lore's prior startup (Lore, for the record, publicly disputes the spite narrative — but Tom Brady is more believable when he wishes the Patriots the best of luck).
- As I wrote at the time for Fortune: "Jet will use a membership-based, real-time trading platform to provide deeper discounts than are currently available online, and steer users toward a 'smart cart' experience rather than impulse buys."
Fast forward: Jet's underlying thesis never really panned out, and after being acquired it transitioned more into focusing on urban millennials that Walmart otherwise struggled to reach.
- But the deal wasn't really about Jet.com as a product or a technology. It was about Lore, who was put in charge of Walmart's entire e-commerce business, and his team.
- In short, this was a gussied-up acqui-hire.
- Walmart's e-commerce sales skyrocketed since the deal, including a 37% bump in 2019. And that's all before the pandemic forced changes to consumer behavior, which began to be reflected in a 74% surge for Walmart e-commerce in Q1 2020.
The bottom line: Lore hasn't gotten close to defeating Amazon, but he's helped transform Walmart into one of its largest and most viable rivals. That's a pretty strong return on investment, even if Jet.com is grounded.