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Walmart’s buying its way to digital success with $3bn Jet.com deal – surely a staff cull is next

At number 15 in the Forbes Global 2000 list of the world’s biggest public companies (number one in terms of pure sales), you might not expect Walmart to be struggling with digital.

But its online retail growth has been on a steady downward trajectory over the past two years, which bucks the trend seen by the segment as a whole, as well as that felt by bricks-and-mortar competitors.

It’s tried beating Amazon at its own game by introducing things like a very thinly veiled five-day, free shipping event designed to take a chunk out of Prime Day, the digital-first company’s biggest sales day of the year.

Now, it’s abandoned any hope of concealing its strategy by buying online deals platform Jet.com for $3 billion in cash and $300 million in Walmart shares.

This values Jet.com at significantly more than the near-billion-dollar, pre-money valuation the digital retailer had when it raised $350 million in November last year.

As Walmart claimed in a statement, though, Jet.com is seeing “more than 400,000 new shoppers added monthly and an average of 25,000 daily processed orders” with its ‘more you buy, more you save’ model.

And the retail giant reckons it’s getting much more than a piece of a potentially habit-changing digital store.

“The acquisition of Jet will infuse Walmart with fresh ideas and expertise, as well as an attractive brand with proven appeal, especially with Millennials, the first generation of true digital natives,” Walmart explained.

While the two brands will remain separate for now, the company also said: “Walmart and Jet will leverage innovative technology solutions from both companies to develop new offerings to help customers save time and money.”

Yes, it’s buying digital natives, to build digital-native shopping experiences.

Problem is, Jet.com has, among other things, prided itself on being a great place to work. Walmart is notorious for being much less so.

Walmart, too, is actually the largest private employer in the world, with more than 2 million staff worldwide, dwarfing the 900-strong Jet.com workforce.

Walmart’s money will, in the short-term, stave off concerns that Jet.com would simply burn through its investors’ cash, and quickly fail, as those in the “graveyard of e-commerce” already have.

But, given that Jet.com’s CEO Marc Lore’s stated ambition is that whoever truly solves online shopping will “drive millions of middle-class Americans to move all their shopping online”, if the deal pays off, surely Walmart will soon be looking at slimming its own operations.

This is a bold move from Walmart, a company that obviously knows consumer habits are moving away from large, superstore shopping.

If Jet.com has the secret sauce to nail digital, that’ll change Walmart’s business for the longterm. Which means more digital, fewer staff.

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