This morning, Walmart made official its previously rumored, $3 billion play for Jet, the promising e-commerce upstart. It’s tempting to think of this as Walmart’s shot at Amazon. Don’t. The online retail race still won’t be close. And it may never be.

That’s not to say that Walmart doesn’t need Jet; it does, for myriad reasons. To think of it in terms of Amazon, though, requires a serious shift in perspective. Compared with Amazon, Walmart barely registers online. Jet doesn’t suddenly make it a threat. What it does do is position Walmart to more effectively pick up Amazon’s scraps.

Jet Set

When Jet launched last year, it did so with a fresh proposition: the pricing model offered savings that increased along with your shopping cart tally. The more you bought, the deeper the discount. Most items came with the same free two-day shipping offered by Amazon Prime.

“We believe the acquisition of Jet accelerates our progress,” said Walmart CEO Doug McMillion in a statement announcing the acquisition, which is expected to close by the end of the year. “ will grow faster, the seamless shopping experience we’re pursuing will happen quicker, and we’ll enable the Jet brand to be even more successful in a shorter period of time.”

Jet will remain an independent brand, but its innovations will seep into Walmart’s online business, just as Walmart’s purchasing power and distribution will bolster Jet’s pricing and selection.

“The real challenge for Walmart is that it is not successfully competing on convenience, ease and speed when it comes to online. Amazon’s systems and site are just better in these areas,” says Neil Saunders, CEO of retail research firm Conlumino, tells WIRED. “Jet is part of the solution to this issue.” In a note written ahead of the deal, Saunders also suggested that Jet could use Walmart’s huge network of stores and blue chip logistics as, effectively, “a big warehouse and distribution system.”

All of which proves there’s plenty of room for synergy here. It’s a match made in retail heaven, assuming the deal goes through and Walmart can effectively integrate Jet. What it won’t do, though, is put it in anything like the same league as Amazon.

A Little Perspective

Let’s start with scale. This past March, researcher eMarketer ranked the top 25 companies in online retail. First place, not surprisingly, was Amazon, which scored over $79 billion in e-commerce sales last year. Walmart came in second place—at $13.5 billion. That’s not a gap; it’s a chasm.

It’s also not clear how Walmart would catch up online, even with Jet. It has more purchasing power than Amazon, and so could hypothetically offer lower prices on many items. But Amazon, as O’Shea and other analysts have noted, has historically not cared about turning a profit in retail. That’s even more the case now that its most profitable business isn’t selling products, but rather cloud services, through its AWS division. Over the last six months, AWS has turned an operating income of $1.32 billion. Over that same period, Amazon’s traditional businesses produced roughly $1 billion in combined North America and International income. Walmart may have room to trim prices, but Amazon can (and has shown ample willingness to) actively turn a loss. Especially now that it can offset balance sheet negatives with its robust cloud business.

“Amazon has got a lead online that’s me running against Usain Bolt, and that’s not going to be a fair race,” says Moody’s lead retail analyst Charlie O’Shea.

The other important number to remember? Eight percent. That’s roughly how much of total US retail takes place online, says O’Shea. It’s a number that sounds suspiciously small to a tech-savvy ear, but again Walmart and Amazon offer an illustrative example. The former did $485 billion in total sales last year. That’s an order of magnitude more than the online retail king.

The rate of growth is slower than one might expect also. O’Shea pegs it in the low teens, year to year, a respectable but not transformative pace. He notes that some product segments (food in particular) still don’t make much sense online, while more Internet-friendly items have already saturated the market. The question given that scale isn’t so much if Walmart can beat Amazon. It’s why Walmart would spend $3 billion on an unproven online retailer in the first place when it’s doing just fine without it where it matters most.

Fighting for Second

Walmart’s biggest concern isn’t existing online retailers. It’s fending off other brick-and-mortars that have finally made the transition online.

“The challenge for Walmart is, you’ve got to be the second site,” says O’Shea. “If someone jumps off Amazon’s site, there’s got to be a reason they jump.” Buying Jet helps Walmart catch them.

That’s increasingly important, as the number of landing pads multiplies. Staples does more than half of its overall sales online, according to eMarketer, and was just shy of Walmart in e-commerce sales last year. Target only did $2.5 billion online last year, but is growing at a rate of roughly 30 percent, says O’Shea. If any one of these companies—or the sum total of them—figures out a better online model before Walmart does, it could quickly fade online. Yes, it’s a small percentage of its overall sales today. But it’s still billions of dollars at stake each year.

In fact, some view the Jet buy as less about Jet specifically than it is about the man who founded it, Marc Lore. Lore had previously founded Quidsi, which operated e-commerce sites like and before selling to Amazon in 2011. Lore is widely regarded as one of the sharpest minds in online retail today; that’s how he was able to raise over $500 million in funding for an e-commerce startup in the first place. Now, he works for Walmart.

“It seems like this is an acquihire,” says Forrester retail analyst Sucharita Mulpuru-Kodali. “I think the real value is to have someone like Mark rethink all of Walmart’s dot-com strategy and task Jet with growing Walmart’s dot-com business to $100B.” In other words, about as much as Amazon and Walmart today, combined. The good news is, even half that would be a pretty clear win.

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Walmart’s $3 Billion Buy Still Leaves It Way Behind