The recent acquisition of Jet.com by Walmart for $3.3 billion will give the retail giant advantages like a more robust ecommerce platform, a stronger digital brain trust and an expanded online catalog, but it won’t appreciably close the wide gap between Walmart and Amazon, according to the head of an online marketplace technology firm.
Michael Dash, co-founder and CEO of ChannelReply, said Walmart had built its marketplace in reaction to Amazon, whereas Jet.com was built from the ground up to compete with it.
“Combining the Walmart name with Jet.com’s technology and infrastructure gives them a leg up in trying to compete against Amazon, but I don’t see Walmart taking large market share against them,” Dash said. “They’ll take some lost share back, increase their catalog and gain sales on their platform among customers who know and love Walmart, but I don’t think they’ll be getting all new customers who see them as a trusted source in ecommerce.”
To illustrate what Walmart is up against, Dash cited two key stats: 60% of all online revenue growth in 2015 came from Amazon, according to Forrester, while 50% of its revenue is generated by third-party sellers on its marketplace.
“Walmart will be able to increase its catalog, particularly in categories like auto parts, home goods, clothing and collectibles, where Jet.com is making a huge push and Walmart wasn’t competitive in the past,” Dash said. “But I find it hard to believe they’ll make a significant impact, given Amazon’s far greater catalog.”
Dash said he saw Jet.com remaining as a separate entity for at least a couple years or more before Walmart figures out how to relaunch its ecommerce marketplace based on all it learns from Jet.com CEO Marc Lore and his team.
“They’ll tap into Jet.com’s huge user base initially, and maybe scale back on its massive marketing spend,” Dash said. “Down road, it doesn’t make sense to run two different entities because it’s too costly and doesn’t benefit Walmart. They’ll consolidate into one massive platform with all the bells and whistles.”
Another plus for Walmart will be an ability to attract a higher caliber of digital and ecommerce workers with Jet.com in its stable, Dash predicted. “The biggest advantage was the talent at Jet.com,” he said. “It’s an amazing team, everyone from the CEO on down, and Walmart knows that. It’s difficult to attract talent to Walmart whereas Jet is a cool tech company.”