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Wal-Mart's $3 billion purchase of Jet.com will help it better compete with Amazonby Natalia Angulo-Hinkson
Economics & Business#EcommerceWars

It's official. Wal-Mart has agreed to purchase discount e-commerce site Jet.com for $3 billion.

The deal is the biggest in e-commerce history. It could make big waves across the sector.

Let's break it down.

Wait. What's Jet?

Jet launched a year ago, painting itself as a lower-priced Amazon alternative. It's a pretty similar online marketplace.

The main difference between Jet and its rivals is that shoppers using Jet receive price offers based on different factors, such as how many items are in their basket. When Jet launched, CEO Marc Lore promised customers that for $50 a year they could "save on pretty much anything you want to buy online."

Though it was able to secure more than $500 million in funding early on, Jet has already experienced how hard it is to compete in the very crowded e-commerce space.

But it did just celebrate its first birthday, so it's survived for a while. 

Why does Wal-Mart want Jet?

It's all about Amazon. 

While Wal-Mart has the capacity to pose a threat to Amazon, it's had to work to make legitimate waves in online retail. Adding Jet to its arsenal only helps it make its e-commerce arm faster.

Would this help Wal-Mart?

Well, Amazon's stock slipped when initial reports surfaced the two companies were in talks to merge. But beyond that, Jet's technology and 400,000 mainly urban, millennial customers will help Wal-Mart better compete with Amazon.

"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. Our customers will win," Wal-Mart Stores CEO Doug McMillon said in a statement.

McMillon called the acquisition a "jolt of entrepreneurial spirit" for Wal-Mart.

Some people have praised the merger.

But it's definitely not unanimously loved.

"You can't put a number on what it means to create a personal connection to the consumer."

Jet CEO Marc Lore

Why are people disappointed?

The Wall Street Journal has described the takeover as "a disappointing end for one of the most ambitious challengers to Amazon."

Jet was originally founded by a man who has sold two companies to Amazon, including Diapers.com. CEO Marc Lore said that when he sold Diapers.com, the new owner stopped putting personal notes in the packages for the parents. 

So to fans of Jet, with its focus on the customer, it may seem like the company is selling out.