Last Word: Will the Jet.com Acquisition Work?
In America, we don’t quite understand just how good we have it. We have our own cars and the autonomy to go along with it. Brick and mortar store fronts are still doing well enough to exist and American eCommerce has positioned itself as a relative luxury and not yet a necessity.
Just 110 years ago, a motor car was a luxury, a buggy was a necessity. in India and China, eCommerce has begun to emerge as option one for all retail.
Via Ben Thompson, Stratechery.com:
I wrote in Cars and the Future that there were three different changes occurring in the car market: the shift to electric, the shift to self-driving cars, and the shift in business model from owned-and-operated vehicles to transportation-as-a-service.
China’s consumers (who depend on vast systems of public transit) need eCommerce for goods and services whereas our cities’ smaller populations and high percentage of independent transportation allow us to lean on our traditional commerce systems. How we travel will influence how we shop. Though we have the shining star that is Amazon.com – where China goes, we follow. The stats are alarming: 85.7% of China is mobile-first. America is ~ 74%. This is significant because it is indicative of a wave of change, where mobile will be our primary device and our desktop computers will be reduced to our clerical tasks. China is projecting our own adoption curve.
In China, $.15 of every $1 spent on retail is through eCommerce, In the United States – that number is $.07 of every $1. China’s analysts expect their number to hit $.40 per every dollar spent by 2020.
So what does this mean for Jet.com and Wal-Mart, a relationship that many of us pan and even more of us could care little about? Eventually, America will outpace China’s emphasis on eCommerce innovation (spearheaded by Alibaba’s massive growth). I will always bet on us. But we are early, very early. For those of us who see eCommerce eventually accounting for 80% of all retail activity, that means that we are 90% away from the finish line.
Instagram recently cloned Snapchat’s format to slow their junior competitor’s threatening growth. I don’t see the Jet.com M&A as a Wal-Mart play on eCommerce innovation, rather – I see it as way for Wal-Mart to convert it’s existing shoppers and prevent further migration to Amazon.com. Wal-Mart’s bricks and mortar, as we know it today, won’t be around. And their CEO, Doug McMillon is finally convinced of that. Will the Jet.com acquisition work? Maybe not but it’s Wal-Mart’s best chance to reinvigorate what it has long neglected.
See more of the issue here.