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amazon vs jet 2Walmart is taking its biggest step yet to battle Amazon.com for supremacy in the realm of online retail.

Follow-up: Walmart confirms $3.3B Jet.com acquisition: Here’s how they plan to take on Amazon

According to a report from Recode, Walmart is expected to announce the acquisition of Hoboken, N.J.-based discount online retailer and Amazon competitor Jet.com Monday. The deal would value Jet at approximately $3 billion.

Jet co-founder and CEO Marc Lore, will continue to run Jet and will also be in charge of Walmart’s e-commerce business, Recode reports.

Lore has a history with his main competition. He sold his previous company, Quidsi, known for the Diapers.com site, to Amazon in 2010 for about $545 million. It was later revealed through reporting by Brad Stone in his book The Everything Store, that Amazon put the screws to Quidsi. Stone detailed a price war between Amazon.com and Diapers.com, which culminated in Amazon launching a competing service called “Amazon Mom” at the same time that Quidsi execs were in an acquisition meeting with Bezos.

Last year, Jet closed a $500 million funding round, and its valuation tops $1 billion.

Marc Lore
Marc Lore

Jet projects it will have to spend hundreds of millions to establish loyalty among customers. The sale could give Jet the funds needed to establish itself among customers and help inject energy into Walmart’s growing e-commerce efforts as it competes more aggressively with Amazon.

Jet originally set out to accomplish a lot of what Amazon does with fast shipping and a huge selection of goods, but it wanted to build a completely new model to do it. Using a formula related to the size of the order and proximity of the merchandise to buyers, Jet offers lower prices than users might otherwise find. Jet originally charged members a $50 membership fee to shop on the site, but later dropped that plan.

GeekWire tried the service out before it launched last year, and similar media outlets have reported item discounts. GeekWire previously reported members get small discounts on most items and additional savings were tacked on if they did things that made transactions cheaper on Jet’s end, like placing larger orders or selecting items that didn’t have to be shipped as far.

Walmart has been trying for years to compete with Amazon in the online shopping market. It launched a competitor to Amazon Prime called ShippingPass, which costs half as much as a Prime membership. Walmart also countered Amazon’s big Prime Day sale with a week-long sales event of its own.

 

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