When Wal-Mart Stores Inc. closes its acquisition of Jet.com Inc. later this year, Jet CEO Marc Lore will oversee both Wal-Mart and Jet’s online retail efforts.
Wal-Mart CEO Doug McMillon told reporters Monday afternoon that Lore’s new role will become official after the company’s $3.3 billion cash and stock acquisition of Jet. Wal-Mart, No. 4 in the Internet Retailer 2016 Top 500 Guide, announced that the companies had agreed to terms on the deal on Monday morning.
According to an internal memo distributed to Wal-Mart employees and obtained by Internet Retailer announcing the Jet.com acquisition, Wal-Mart president and CEO of global e-commerce Neil Ashe will leave the company at the end of this fiscal year. McMillon praised Ashe’s work to grow Wal-Mart’s online sales since he was promoted to his current position in January 2012.
“Under Neil’s leadership, Wal-Mart has established itself as a leader in Silicon Valley, more than doubled e-commerce gross merchandise value with Walmart.com, and is the second most trafficked e-commerce site in the U.S.,” McMillon wrote. “He also led the work developing a nationwide fulfillment network which, for the first time, gives our customers access to two-day shipping throughout the U.S.”
The chance to work with Lore (pronounced Lor-EE) proved to be appealing to McMillon when it came to acquiring Jet.
“The job that [Lore] will ultimately end up with is different in some ways than the job we were asking Neil Ashe to do in that it’s more focused on U.S. e-commerce,” McMillon told reporters on the conference call. “Marc’s e-commerce experience and success are attractive. His mindset and the way the two of us have come together very quickly to see the e-commerce opportunities and share strategic opportunities and ideas together has been quite enjoyable.”
McMillon says he is excited about adding Lore to Wal-Mart’s stable of talent. Whether his expertise can bolster Wal-Mart’s e-commerce operations depends on whether he can fit within Wal-Mart’s organizational structure, say experts.
“The reality at Wal-Mart is it’s a very large and complex company and historically it’s been challenging for outsiders to win the kind of support that they need on a short-time scale,” says Keith Anderson, vice president of strategy and insights at price monitoring firm Profitero. “The real question I have is what degree of autonomy is he going to have over Jet and, secondly, culturally how is he going to coordinate across the massive scale of Wal-Mart’s different business units and geographies to execute what they’ve been able to do so far? For anyone who is coming from a fully autonomous company to an executive leadership role inside [an established organization], my question is how will Marc earn or be blessed with the credibility to leverage all of Wal-Mart’s capabilities to accomplish more than he could if he were still independent.”
McMillon declined to say what kinds of incentives he offered Lore to stay on through the transition.
Some industry experts say the talent that Jet has may have been more attractive to Wal-Mart than either its SKU count or large customer base.
“They’re buying brains, they’re buying methodology, systems and a mindset that they themselves could never figure out,” says Eric Schiffer, chairman and CEO of Patriarch Private Equity. “The knowledge that they’re going to gain in competing with Amazon in this acquisition is second to none. [Wal-Mart] is struggling in this transition from retail to e-commerce. This will help to punch back against the aggressive march by [Amazon founder and CEO Jeff] Bezos on their territory.”
Amazon is No. 1 in the 2016 Internet Retailer Top 500 Guide.Favorite