Walmart CEO Explains Why Company Spent $3 Billion On Money-Losing Jet

Image courtesy of Mike Mozart

When the CEOs of Walmart and of Jet met for the first time, they fell in corporate love. The two men couldn’t stop envisioning the future of their companies together, sketching out their dreams of combining Walmart’s inventory and supplier relationships and Jet’s e-commerce algorithm. The companies announced their engagement this week, and Walmart CEO Doug McMillon explained what it was he ever saw in the startup, which has barely been selling to the public for a year.

Walmart, after all, is known for its innovations in logistics and ways to save its own an customers’ money. “If Walmart were starting today and we were building an e-commerce business some of the things that Jet designed into their approach would have been things we would have thought of,” McMillon told CNBC in an interview (warning: auto-play video at that link) after the merger announcement.

Walmart is paying $3 billion in cash and $300 million in Walmart shares for the startup, which is the biggest acquisition of an e-commerce company ever: the second-biggest is QVC’s acquisition of flash-sale site Zulily a year ago.

Jet fits in with what Walmart wants to do in the future, though: McMillon notes that the startup’s algorithm thinks about purchases in terms of the total “basket,” or everything purchased at once, not the individual items.

Walmart plans to keep Jet as a separate brand, but integrate more of its technology in Walmart’s own website. According to CNBC, Walmart had set aside more than $1 billion to invest in e-commerce this year.

Wal-Mart CEO Doug McMillon on what he saw in Jet.com [CNBC] (Warning: auto-play video)