Such technologies were attractive to Walmart, according to sources, as it attempts to
use its vast store and warehouse footprint to reduce shipping costs and cut down on
delivery speeds. Amazon has put pressure on the whole industry through its Amazon
Prime shipping program, which now delivers some goods in as little as two hours in
dozens of cities.
Walmart is expected to utilize some parts of the pricing technology on its other ecommerce
sites. Walmart may also use some of Jet’s technologies to expand the
business it gets from other vendors selling their ware through Walmart.com. This
model — known as a thirdparty marketplace — is also employed aggressively by
Amazon, which now gets around half of its unit sales from that group.
Even with Walmart acquiring the strong Jet leadership team and proprietary
technology, the deal still will be viewed as a rich, if not desperate one, by some
industry observers.
Jet does not disclose revenue numbers, but my backofthe envelope math suggests
the company is on pace to do no more than around $500 million in revenue over the
next year. An acquisition price that is six times a company’s revenue is mostly
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unheard of in ecommerce, especially for a company that is nowhere near profitable.
Dollar Shave Club sold to Unilever for between four and five times revenue but had
said it could be profitable on an Ebitda basis by year’s end