Jet Acquisition Redraws Battle Lines Between Walmart and Amazon

The news hit the retail industry like a ton of bricks late last week: Walmart was in talks to buy for a rumored $3 billion. By Monday morning, it was official: the biggest deal in ecommerce history was complete (at $3.3 billion), and Walmart has a shiny new online toy to show off alongside its famously extensive network of physical stores.

Many people have speculated as to why Walmart would drop this kind of money on a company that has only been around for a year, operates on incredibly thin margins, and has yet to turn a profit. has been averaging an additional 350,000 new customers per month, but its customer base is still very small relative to Amazon's, or even Walmart's, for that matter. So how does this move help Walmart take a stronger position against Amazon or differentiate itself from its more traditional competitors like Target?

A $3 billion endless shelf blasted onto the ecommerce scene by raising hundreds of millions in funding on the premise that it would undercut Amazon and other retailers to attract and convert shoppers. However, that's not what Walmart bought. Walmart is already known for its commitment to everyday low pricing and is likely much more interested in the assortment expansion and differentiation offers, along with the leadership Marc Lore brings to its marketplace community.

Earlier in the year, Walmart publicly stated its plans to expand its online assortment by a million products a month, enabled by expanding its marketplace seller community.  The big-box retailer made significant investments in revamping its website to manage greater product and seller diversity and quantities. Now midway through the third quarter, Walmart's ecommerce growth seems to have missed expectations, prompting the company to turn to and its network of sellers to provide an immediate and hopefully long-term boost.

While well known for its everyday low price positioning, Walmart is also fully aware that low prices equal low margins, and without access to a virtually endless shelf, its overall revenue stream, profitability and growth potential has been compromised. But now, with its new multi-billion-dollar asset in, Walmart has access to a vast ecommerce platform, assortment and knowledge base, including a wealth of consumer data. 

What does the sale mean for apparel?
Initially, ran into a few conflicts while building out its site and product offerings. The company received a backlash from several retailers and brands when the online startup linked its site product pages to retail and brand sites that were not aware of the connection or partnership with the company.  Despite this hiccup,'s marketplace affiliate program today boasts a handsome roster of major retailers, helping it recruit shoppers with not only low prices, but also a solid selection of trusted product lines from which to choose.

Marc Lore is the original category killer with his first venture, Quidsi, bringing us and, among other ecommerce sites. Quidsi was of course purchased by Walmart's archrival Amazon almost six years ago for what now seems like a bargain price of $545 million. And, based on what's been heard from's founder as of late, we can expect to see Walmart take up this quest with apparel. Walmart's first steps are expected to follow those of Amazon with a heavy investment in private label clothing that has the promise of higher profit margins than can be earned by acting as a pure retailer or marketplace platform. “It's absolutely something we have in the works," said Lore, calling the opportunity “low-hanging fruit." It's not an either/or proposition, but an and proposition that gives the best of both worlds to consumers and the company alike.

As we discussed in detail in a recent Apparel Magazine story, private label is a massive and current point of focus for Amazon including the launch of seven original apparel lines earlier this year. This comes at a time when shoppers are increasingly shying away from premium name brands like Ralph Lauren and choosing affordable, stylish options that allow them to more regularly refresh their wardrobes. The name on the label matters to shoppers much less today than the financial and style flexibility that private label offers, especially to shoppers in the Millennial and Centennial brackets. So while brings Walmart the promise of improved online competitiveness with legions of marketplace sellers, it's the battle for apparel that is poised to redraw the lines between Walmart and Amazon and impact the competitive retail landscape for years to come.

Striking a balance in battle strategy
It remains to be seen how much of an impact the acquisition of will have on Walmart's bottom line. Jet will inevitably improve Walmart's overall assortment and give the company that elusive endless shelf it has been chasing for some time now. But more importantly, it is a microcosm for a broader shift in retail battle strategy from pricing to assortment including private label.

We will continue to see more retailers moving away from direct head-to-head pricing wars with differentiated assortments, especially during the quickly approaching holiday “must-win" dates. Chasing rock bottom prices isn't a fun game to play, and there are very few who can succeed at it, but giving people what they want has always been a winning strategy.

Jenn Markey is the vice president of marketing for 360pi, a company that provides retail price and product intelligence solutions.