Posts Tagged 'Jet.com'

Did Walmart deserve the punishment?

By “punishment,” I mean the 10% drop in Walmart’s stock price yesterday (February 20) when the company reported slower-than-expected sales and profits in its e-commerce business. My comment at RetailWire expresses a contrary opinion about the market reaction:

Walmart’s stock took a similar hit a few years ago when management decided to investment-spend in the store experience — more payroll in areas like fresh food, remodeling and refixturing as needed, and so on. These were smart strategic choices that weren’t meant to please investors only interested in the latest quarter. Walmart’s decisions at the time have been rewarded with better results ever since.

I look at the 10 percent drop in stock price as a similar overreaction. Walmart is now starting to come up against its own numbers after the Jet.com acquisition, and (more importantly) it’s doing major spending on logistics and marketing to gain omnichannel market share. I’m no stock picker, but maybe this is a buy opportunity …

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Walmart buys Jet.com

Some observations (about a month late) about Walmart’s announcement in early August that it is acquiring web startup Jet.com. Here’s my comment from a recent RetailWire panel discussion:

The risk isn’t great to Walmart, considering the purchase price vs. Walmart’s scale. But the reward is definitely in favor of Jet.com’s founders and investors, who are about to become very wealthy. The real question is whether Walmart intends to keep the Jet.com brand alive or simply wants to take a competitor off the playing field.Jet.com seems to have followed the typical internet startup path of losing money while aggressively trying to build traffic and market share. But Walmart’s move makes it hard to tell if Jet’s business model is sustainable over the long haul. Let’s face it — nothing about this move changes the reality that Amazon is the alpha dog.


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