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This buyout is based on FUD, and FUD-based investment is a recipe for disaster. From the OP: >But for both Jet and Wal-Mart, Amazon’s frenzy of warehouse cons

by ktamura 10y ago

This buyout is based on FUD, and FUD-based investment is a recipe for disaster. From the OP: >But for both Jet and Wal-Mart, Amazon’s frenzy of warehouse construction and fast delivery—as quickly as one-hour—have proved formidable. The retailer has logged three straight quarters of record profit while locking in an estimated 60 million members to its $99-per-year Prime service, cultivating a loyal customer base and giving consumers fewer reasons to shop at traditional stores. The answer is not buying a unicorn startup with seemingly no fundamental advantage over Amazon. If I were Wal-Mart, I would take the $3B and try to build a great technology organization and/or fund Wal-Mart Labs more. So much of what makes Amazon better is the data accrued over the last 18 years and the insight mined from them by their super-talented team. And Jet.com is definitely not going to give that to Wal-Mart overnight. If I were them, I'd focus on long-term viability, not a short-term hack to placate shareholders.

carsongross 10y ago
Upper management is filled with cargo cult thinking around technology. I see it even in software companies. Someone advocating a rational, realistic way forward (like you) would be pushed out in favor of people who "get it" and want to "move things forwards dramatically"
- hueving 10y ago
  Yeah, I can see the stupid arguments already. We don't want to make 'incremental improvements', we need a game changing leap forward!
- api 10y ago
  Business in general is filled with cargo cult thinking in my experience.
  - brianwawok 10y ago
    Isn't that what the culture of a business is? A bunch of people who think similar things. If you take a bunch of similar people and apply the same rewards, behavior would tend to be similar. partially why consultants can come in and clean up shop. They don't care about following the conventions.
  - beachstartup 10y ago
    people in general have this tendency, i think.
michaelbuddy 10y ago
Jet, based on its promotional content is heavy into the home products category. Walmart would love to knock them out to absorb that competition to getting delivery and even subscription delivery of home products. So it may be the price Walmart is willing to pay to ensure nobody is making Jet their new source for houseware products and avoiding the WalMart Brand. We also don't know what else Jet has in the pipeline, negotiating with them and through their research may be revealing more to WalMart. all said, I hope Walmart doesn't buy Jet. I want Jet to exist on its own. Competition is the way forward in shopping, if not against Walmart, definitely against Amazon.
- Someone1234 10y ago
  What surprises me is that in many European countries, you can now order ALL of your groceries delivered. You place an order, and someone physically walks around a local supermarket, picks up stuff, they put on a van, and it is delivered to your home. It is actually very inexpensive (and free if you spend enough). Yet nobody in the US does that (well nobody outside of big cities). Walmart right now today has a HUGE advantage, they can deliver products impossible to Amazon like fresh fruit and veg, meats, and all kinds of things. But yet, do they? No. Walmart already has "warehouses" in every state, city, location. They're called stores. But instead of double dipping on that advantage, they keep using them as traditional retailers while Amazon rules the home delivery advantage. Amazon are currently moving into an area Walmart already has an advantage in (being local) but because Walmart under utilises their advantage to such a large degree, Amazon is left alone to do so.
  - dragonwriter 10y ago
    > What surprises me is that in many European countries, you can now order ALL of your groceries delivered. You can do it in much of the US, too; a number of brick-and-mortar grocery chains offer online ordering home-delivery services, even before considering third-party or online-only grocers.
    - ntpeters 10y ago
      I've lived in multiple states in the past 5-ish years. Nowhere I've lived has had this.
brianbreslin 10y ago
Walmart has already spent close to $12B funding walmart.com/labs and not made a dent in catching Amazon. Jet has a super smart team looking at ways to gain margins in areas amazon is ignoring. short term their investors won't appreciate this buy.
- jodah 10y ago
  12B sounds like an incredible number for labs. Is there a source?
  - blackaspen 10y ago
    I think it's 12Bn of investment in eCommerce, which includes but isn't solely Labs.
- untog 10y ago
  > Jet has a super smart team looking at ways to gain margins in areas amazon is ignoring So does Walmart Labs, though. What makes Jet a better buy? Even if they've proven successful as their own company I'm super-skeptical of any startup merging with a larger organisation and retaining anywhere near 100% efficiency.
  - sremani 10y ago
    One of the way forward I see is that, Walmart will let Jet be Jet but will the major source of the products etc. Mostly growing from the back-end of it. Enabling things like same day delivery in certain instances. I would actually let Walmart groom Jet as a separate brand.
- paulcole 10y ago
  > Jet has a super smart team They might be smart but they haven't been successful. They almost immediately abandoned their original value proposition-- make money on the subscriptions like Costco and break even on sales.
  - 10y ago
dawhizkid 10y ago
Could the same have been said for Dollar Shave Club? Maybe a good time to join a CPG/e-commerce startup :)
- ktamura 10y ago
  It's definitely a good time to join or start one: Verticalized Consumer Packaged Goods startups with solid software infrastructure (hence the ability to power logistics/distribution/etc. with software) can undercut incumbents while maintaining a healthy margin. I think the key phrase here is _verticalized_. Go-to-market as well as scaling operations is much easier when you can focus on a single product category.

by ktamura 10y ago

carsongross 10y ago

Upper management is filled with cargo cult thinking around technology. I see it even in software companies. Someone advocating a rational, realistic way forward (like you) would be pushed out in favor of people who "get it" and want to "move things forwards dramatically"

hueving 10y ago
Yeah, I can see the stupid arguments already. We don't want to make 'incremental improvements', we need a game changing leap forward!
api 10y ago
Business in general is filled with cargo cult thinking in my experience.
- brianwawok 10y ago
  Isn't that what the culture of a business is? A bunch of people who think similar things. If you take a bunch of similar people and apply the same rewards, behavior would tend to be similar. partially why consultants can come in and clean up shop. They don't care about following the conventions.
- beachstartup 10y ago
  people in general have this tendency, i think.

michaelbuddy 10y ago

Jet, based on its promotional content is heavy into the home products category. Walmart would love to knock them out to absorb that competition to getting delivery and even subscription delivery of home products. So it may be the price Walmart is willing to pay to ensure nobody is making Jet their new source for houseware products and avoiding the WalMart Brand. We also don't know what else Jet has in the pipeline, negotiating with them and through their research may be revealing more to WalMart. all said, I hope Walmart doesn't buy Jet. I want Jet to exist on its own. Competition is the way forward in shopping, if not against Walmart, definitely against Amazon.

Someone1234 10y ago
What surprises me is that in many European countries, you can now order ALL of your groceries delivered. You place an order, and someone physically walks around a local supermarket, picks up stuff, they put on a van, and it is delivered to your home. It is actually very inexpensive (and free if you spend enough). Yet nobody in the US does that (well nobody outside of big cities). Walmart right now today has a HUGE advantage, they can deliver products impossible to Amazon like fresh fruit and veg, meats, and all kinds of things. But yet, do they? No. Walmart already has "warehouses" in every state, city, location. They're called stores. But instead of double dipping on that advantage, they keep using them as traditional retailers while Amazon rules the home delivery advantage. Amazon are currently moving into an area Walmart already has an advantage in (being local) but because Walmart under utilises their advantage to such a large degree, Amazon is left alone to do so.
- dragonwriter 10y ago
  > What surprises me is that in many European countries, you can now order ALL of your groceries delivered. You can do it in much of the US, too; a number of brick-and-mortar grocery chains offer online ordering home-delivery services, even before considering third-party or online-only grocers.
  - ntpeters 10y ago
    I've lived in multiple states in the past 5-ish years. Nowhere I've lived has had this.

brianbreslin 10y ago

Walmart has already spent close to $12B funding walmart.com/labs and not made a dent in catching Amazon. Jet has a super smart team looking at ways to gain margins in areas amazon is ignoring. short term their investors won't appreciate this buy.

jodah 10y ago
12B sounds like an incredible number for labs. Is there a source?
- blackaspen 10y ago
  I think it's 12Bn of investment in eCommerce, which includes but isn't solely Labs.
untog 10y ago
> Jet has a super smart team looking at ways to gain margins in areas amazon is ignoring So does Walmart Labs, though. What makes Jet a better buy? Even if they've proven successful as their own company I'm super-skeptical of any startup merging with a larger organisation and retaining anywhere near 100% efficiency.
- sremani 10y ago
  One of the way forward I see is that, Walmart will let Jet be Jet but will the major source of the products etc. Mostly growing from the back-end of it. Enabling things like same day delivery in certain instances. I would actually let Walmart groom Jet as a separate brand.
paulcole 10y ago
> Jet has a super smart team They might be smart but they haven't been successful. They almost immediately abandoned their original value proposition-- make money on the subscriptions like Costco and break even on sales.
- 10y ago

dawhizkid 10y ago

Could the same have been said for Dollar Shave Club? Maybe a good time to join a CPG/e-commerce startup :)

ktamura 10y ago
It's definitely a good time to join or start one: Verticalized Consumer Packaged Goods startups with solid software infrastructure (hence the ability to power logistics/distribution/etc. with software) can undercut incumbents while maintaining a healthy margin. I think the key phrase here is _verticalized_. Go-to-market as well as scaling operations is much easier when you can focus on a single product category.