It’s no secret why Walmart bought Jet.com for $3 billion: the company’s e-commerce know-howo and experienced could be the key to the brick-and-mortar retailer’s plans of catching up with Amazon, finally, after all these years. But now that the honeymoon is over, it’s time to look at how, exactly, this marriage will work.
Walmart bought Jet.com for a few reasons, including true love, but namely, its experience in the logistics and distribution processes needed for an online business, its affluent customer base, and the e-commerce minded employee culture that is so different from Walmart’s traditional retail environment.
It’ll be tricky for Walmart to suddenly move to the quick and nimble innovative corporate culture of an entirely online business, Mohanbir Sawhney, the McCormick Foundation chair of technology and director of the Center for Research in Technology & Innovation at Northwestern University’s Kellogg School of Management says in writing for Forbes.
“E-commerce demands an entrepreneurial culture where experimentation and failure are par for the course,” he writes. “Converting Walmart into a nimble e-commerce competitor is a little bit like asking an Olympic athlete who has trained all his life as a weightlifter to suddenly become a gymnast. That is why Walmart needed to buy rather than build its e-commerce capabilities.”
Just buying Jet.com doesn’t mean that all Walmart’s dreams will now come true, however: it’ll depend on what the company does now with its new bride. Sawhney’s view is that Walmart will come out best in the long run if Jet.com’s executive team and technical experts rebuild Walmart’s website and work on its e-commerce distribution, thus giving the retailer a bit of a makeover.
Keeping Jet.com’s corporate culture and adaptability will be key, but not so easily accomplished, Sawhney says. And Walmart can’t just come in there with its ideas about how traditional retail works and stifle the spirit of Jet.com.
If history has taught us anything, it’s that successfully combining two companies that are so different isn’t very easy. Often, big corporate parents who snatch up budding new businesses have a tendency to smother their acquisitions into an early grave.
“Moreover, Walmart does not have a history of growing through acquisitions,” Sawhney says.
It’s all worth a try, however, as Walmart is likely aware of these challenges, and figures it’s worth it if it can carve out even a little bit of Amazon’s market share.