SPENDING $3.3 billion on an unprofitable business might seem an undisciplined splurge. By buying Jet.com, a shopping website, Walmart, the world’s biggest retailer, has joined the ranks of investors betting on so-called “unicorns”, or private startups valued at over $1 billion. The acquisition is the most expensive deal ever for an American e-commerce startup, and a sign of just how worried Walmart executives are by the rise of Amazon. It’s also an admission that despite heavy internal investment, the Bentonville giant’s own site, Walmart.com, is nowhere near enough.

Walmart still accounts for a tenth of American retail sales, but that has declined from 11.6% in 2009, according to Cowen Group, a financial-services firm. Amazon’s share is about half of Walmart’s, but it is growing fast. Moreover, last year, of every $10 that American shoppers dispensed on goods, $1 was spent online. Even the Walmart faithful are beginning to use Amazon. Last year just over a tenth of Walmart’s customers shopped on Amazon too.

Online, where the future battle lies, the news for Walmart is scarcely better. Last year its global...Continue reading