In August 2016, Walmart acquired Jet.com — just 13 months after the e-commerce site's launch — and made it a wholly-owned subsidiary. The $3.3 billion acquisition was effectively a strategic decision by Walmart to take on Amazon.
There are many parallels between Walmart’s purchase of Jet and its decision to buy a controlling stake in Indian e-commerce company Flipkart. India is a critical market for retail companies and e-commerce players are battling for a bigger share in one of the world's fastest growing major economies.
Ergo, India is critical for Amazon as well as for Walmart. Viewed against this backdrop, Walmart’s acquisition of Flipkart should not surprise. But what happens to Flipkart now? The Jet purchase could provide some answers.
Business Insider looked at Jet a year after the acquisition to check how the company was faring under Walmart.
Arsenal Against Amazon
Walmart is using Jet as a weapon to fight Amazon online and target customers it previously couldn't reach, said the report by Business Insider. Jet focuses exclusively on chasing the urban millennial, a slightly more affluent demographic than the typical Walmart, according to the report. In Flipkart’s case, Walmart will look to ride the company’s network and experience in India to make inroads in a market that is virgin territory.
Walmart initially entered the Indian market in 2007 through a joint venture with India’s Bharti Enterprises, but the joint venture was called off in 2013 and its presence in India has remained largely static since then, according to a Reuters report.
Flipkart will look to leverage Walmart’s retail expertise and knowledge of the grocery and merchandise supply chain management. Flipkart will also build retail infrastructure especially in rural India, and set up an agricultural supply chain.
With Jet, Walmart ushered in a raft of changes from its checkout and shopping experience to initiatives that work on getting packages to people who rent apartments in buildings without doormen to receive them, according to the Business Insider report. Expect similar changes at Flipkart.
That is not to say there will be no lessons for Walmart from Jet. The startup acted as an innovation pilot for Walmart, and tuned out to be the genesis of some of Walmart's bolder new initiatives, especially a distribution plan that has Walmart employees delivering orders at customers’ doorstep on their way home, according to the report.
Flipkart and Walmart are expected to operate distinct brands after the deal is closed. But customers are likely to find Walmart products on Flipkart because on Jet, the retailer pushed products from e-commerce brands such as Modcloth and Bonobos.
Walmart chose Liza Landsman who previously served as Jet's chief customer officer to run the company.
What about influencing company culture? Walmart tried a new policy of banning swearing and booze in Jet's office. It didn't last, and the policies were both quickly reversed, according to a Wall Street Journal report.
First Published: IST