business news in context, analysis with attitude

by Kevin Coupe

There's been no further word as of this posting about the possibility that Walmart could spend $3 billion to acquire Jet, the online discount retailer, in an effort to be more competitive with Amazon. There have been a multitude of reports that the two companies are in negotiations, and my instinct is that this sounds like a deal that is likely to happen .... by which I mean that it doesn't sound like an idea for a deal floated by some analyst looking to get his name in the Wall Street Journal. (Though, it also could be that Walmart might just make an investment in Jet and not buy the whole thing. We'll see.)

I did think that this analysis by Fortune seems right on target and passing along:

"It’s not clear that Jet would be able to solve Walmart’s competitive problem, however. Jet has shown no evidence it can compete with Amazon except by dramatically underpricing the online giant, using strategies that will require massive amounts of funding and therefore hold little promise of ever being profitable.

"For Jet, a Walmart acquisition would be a huge win, since it would save the company from ever having to prove it has a realistic chance of success. But it’s not at all obvious that it would be a win for Walmart."

I agree. Totally.

I also think it is interesting that a number of analyses are suggesting that rather than give Walmart the ability to catch up with Amazon, a Jet acquisition actually would make it more likely that it would be able to match Target's e-commerce progress. Which, to be honest, never occurred to me.

Until now.

Lots of activity in this space. All of it Eye-Opening.
KC's View: