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Article from Issue 236/2020
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Walmart purchased Jet.com in 2016 with the usual fanfare that comes from a $3.3 billion corporate purchase. Jet.com was an up-and-coming online company, only a year old, that was trying to get an edge on the retail market by offering an innovative discount system and improving the distribution chain.

Dear Reader,

Walmart purchased Jet.com in 2016 with the usual fanfare that comes from a $3.3 billion corporate purchase. Jet.com was an up-and-coming online company, only a year old, that was trying to get an edge on the retail market by offering an innovative discount system and improving the distribution chain.

These billion-dollar assimilations happen all the time in the high-tech industry. The most common scenario is a big high-tech company like Facebook or Amazon buying a startup, but another scenario that is also churning out there in the IT space is the phenomenon of old-school brick-and-mortar companies buying online startups in order to gain a foothold on the future and inject some high-tech juju into their doddering corporate culture.

The Jet.com purchase was widely seen as Walmart's effort to get some leverage on the online shopping business. The company had its own online component, or course, but they were looking to expand their market and offer a shiny new brand to Internet-savvy millennials and urban shoppers who might be less than eager to identify with the Walmart logo.

As part of its Q1 quarterly report, Walmart just quietly announced that it was discontinuing Jet.com, an unobtrusive acknowledgment that the acquisition didn't exactly go according to plan. Old vendors always look a little desperate when they suddenly try to re-invent themselves by buying high-tech companies. It is all so reminiscent of Microsoft's Nokia purchase and other missteps in the elephant graveyard of misbegotten acquisitions. But seriously, what other option do they have? To ignore the Internet is folly. To attempt to build an in-house hacker culture where none existed before is even greater folly.

So Walmart rolled the dice. Some observers say they lost the bet, but, as is often the case, the truth is a little more complicated. Since the Jet.com purchase, Walmart has gradually integrated Jet.com technology into its own platform, including some key features that had helped to differentiate Jet.com from Walmart (and other vendors) in the first place. They also uploaded former Jet.com CEO Marc Lore, who is now the head of Walmart's own e-commerce division.

Internet startups come and go everyday. The interesting part of the story is that Walmart decided there was no point in maintaining Jet.com as a separate brand. They could do business as plain old Walmart and compete directly with the online giants.

Are we witnessing a fuzzing of the line between low tech and high tech? While Walmart and other brick-and-mortar vendors were planning their siege of Amazon's online business, Amazon wasn't exactly standing still. Amazon's purchase of Whole Foods in 2017 shook things up quite a bit for all the vendors who hoped that the online giant would stand still and wait for the attack. In addition to the old schoolers challenging Amazon for the online space, suddenly we had Amazon challenging the old schoolers by inhabiting its own brick-and-mortar storefronts. Perhaps the greatest challenge of all came this month when it was revealed that Amazon is in talks to buy box-store bastion JCPenney.

The battle for the online market isn't new – what is new and interesting is the way online shopping and conventional shopping have begun to converge. Almost every major vendor – and even local groceries and restaurants – offer some means for purchasing online. You can create your own account and even sign up for an email newsletter. At the same time, brick-and-mortar stores provide some benefits that online-only shops could surely use, like local in-store pickup and widely dispersed locations to serve as distribution points.

This gradual merging of online retail with conventional business has been going on for some time, of course, but the sudden changes to the economy due to the pandemic are shaking things out, accelerating the transition, and transforming our culture in ways the prognosticators and venture capitalists have been predicting for 30 years. Whether you surf or drive, they want your money. It's all just shopping now.

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