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What Walmart’s purchase of Jet.com means for you

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By Charis Rebbecca Brown, clarkhoward.com

Walmart just announced that it would buy Jet.com, seemingly in an effort to compete with online giant Amazon. So what does this mean for you, and how could it save you money?

How Jet.com could save you even more

Amazon has long been the king when it comes to ecommerce, with a market share of nearly 30% of all online retail.

But Walmart’s $3.3 billion acquisition of Jet could mean a lot more competition for the ecommerce giant, due to aggressive pricing strategies by Jet. In fact, Jet.com is now promising the cheapest prices on the Internet.

How?

Marc Lore, founder and CEO of Jet.com, explained to CNN Money, “We charge a $50 membership fee, and we do not profit on any of the products we sell.”

“In addition,” he said, “we’ve created this proprietary technology that pulls shipping costs out of the system, by teaching consumers how to shop smarter — by building bigger smarter baskets, (shopping carts) we can reduce prices for consumers. It is similar to Costco in that we charge a membership fee to save you money, but unlike Costco we have millions of products that you can save money on, and it’s not just the big bulk sizes, it’s also the small sizes.”

Customers are rewarded for shopping smarter, and prices keep getting lower if customers add more smart items to their baskets, decline to return items, or pay with a certain payment method.

“Prices start low, and they get even lower, and if you want to waive your right to return items, they go even lower,” he said.

You’ll probably start getting better service from Walmart.com

As a part of the purchase deal, which is expected to close this year after being review by regulators, Jet.com CEO Marc Lore is said to be an “acquihire,” meaning he will provide his ecommerce expertise to help Walmart.com offer better service in the online space.

Walmart.com 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,” Doug McMillon, president and CEO of Walmart, said in a statement.

This is a good thing. Clark commented during the show about how unreliable Walmart’s 2-day shipping program Shipping Pass is — saying he has yet to get items in two days like the program promises.

“The last five items I ordered from Walmart.com using Shipping Pass came in four or five days — nothing came in two, nothing came in three — four was the quickest anything came even though it was bought under the two-day delivery program,” he said.

Clark says Walmart knows it doesn’t have the infrastructure right, but Jet has set up a great infrastructure for warehousing and delivery. “Rather than trying to figure it out itself, Walmart has bought someone that has figured it out,” Clark says.

Added competition means lower prices for you

Another advantage to you is that more competition in the online marketplace will push prices down.

“Amazon has raised prices significantly, and it needs competition.Walmart buying Jet may in fact provide that,” Clark commented. “That’s what’s neat about American capitalism, is that it’s forever innovative in markets that are competitive and people find the opportunity.”

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