Wal-Mart’s $3.3 billion purchase of e-commerce upstart Jet has led to a shakeup of the retail giant's digital operations, with several Wal-Mart executives leaving to make way for Jet personnel, The Wall Street Journal reports.
Walmart.com chief Fernando Madeira (who took his position two years ago after leading the company’s Latin American e-commerce operations), Senior Vice President of E-Commerce Supply Chain Brent Beabout (replaced by Jet co-founder Nate Faust, who’s in charge of fulfillment for Jet and Walmart.com) and Senior Vice President of Global E-Commerce Human Resources Dianne Mills are among those who are leaving or who have already left.
Wal-Mart also plans to incorporate Jet’s “smart basket” dynamic pricing system — widely considered Jet’s “secret sauce” and viewed by many as a key reason for Wal-Mart’s interest in the company — into its flagship Walmart.com site, the Journal adds.
A shakeup of Wal-Mart’s digital operations has been expected, and its time has finally come, suggesting that the retailer is willing to undo much of the work in its existing e-commerce operations in favor of Jet’s “secret sauce.” While experts first questioned how long Jet co-founder and CEO Marc Lore might last at Wal-Mart, considering that he bailed on Amazon three years after the e-commerce giant bought his first web retail effort, Quidsi, Wal-Mart has reportedly incentivized Lore to stick around for at least five years, to the tune of as much as $1 billion.
Columbia University business school retail studies professor Mark Cohen told Retail Dive this summer that the Jet deal would create a culture clash that would end in Wal-Mart e-commerce executives departing. He’s among the observers skeptical of what else the acquisition will do for Wal-Mart.
“You can’t acquire things in the name of growth without knowing or understanding how to rationalize it,” Cohen said. “You can’t buy growth. You can buy elements that will improve your capacity to grow, like for instance Apple’s list of modest acquisitions over the years. These 'Hail Mary passes' typically fail because you can’t just bolt a company onto your back and describe it as 'creative.'"
Cohen also questioned why Wal-Mart, which has spent billions on its e-commerce efforts over the years and installed operations and labs in Silicon Valley, couldn’t have come up with the kind of pricing algorithm that Jet developed, and says he’s skeptical of the technology's true value.
“It’s a shame that Wal-Mart couldn’t come up with its own secret sauce,” Cohen told Retail Dive days before the Wal-Mart/Jet deal was finalized. “It’s kind of pathetic, but it is what it is, because they’re really not getting anywhere on their own. As for dynamic pricing — well, yes, price motivates human beings in a very powerful way. But as I look at Jet.com, I don’t see a lot of differential in those prices.”