In a bid to juice its online business, the world's largest retailer agreed Monday to purchase Jet.com in a $3.3 billion deal. The acquisition will beef up Wal-Mart's e-commerce prowess, from deepening its bench of talent to finding the cheapest way to ship online orders.
These capabilities should help Wal-Mart grab a larger piece of the growing e-commerce pie. They're also the best chance it has of closing the wide — and growing — gap between it and Amazon, analysts said.
"Amazon's got this huge lead. That lead is going to be tough to relinquish but there's a lot of [share] out there," Moody's analyst Charlie O'Shea told CNBC.
Amazon's North America sales topped $62 billion last year. Forrester estimates the company grew its U.S. retail business by $23 billion, accounting for roughly 60 percent of total digital sales growth here.
Those numbers are enviable, especially among its bricks-and-mortar competitors. Still, with Forrester calling for $373 billion in online revenue in the U.S. this year, "there's room for everybody to grow," O'Shea said.
"These guys aren't just kind of sitting there and letting the world do what it wants to do," O'Shea said.
Though Wal-Mart's e-commerce growth its slowing, its $13.6 billion in digital revenue already make it the second-largest online retailer. Yet even if it remains in second place, Jet is still worth the hefty price tag, analysts said.
"I think they're playing for first and they may have a chance at it, but even if they take second place, there's a broad [range]," said Drew Carter, a managing director at AlixPartners. For instance, if an acquisition pumps Wal-Mart's digital growth from, say, 10 percent to 15 percent, "it's probably worthwhile," he said.
Buying Jet was necessary for Wal-Mart to have a shot at catching Amazon, Carter said. Not only does the online brand give Wal-Mart a fresh roster of digital talent, it can also help the company fine-tune its shipping and online logistics — a crucial part of preserving margins.
Jet's co-founder and CEO Marc Lore will lead both Jet and Wal-Mart.com, bringing his vast e-commerce experience as a co-founder of Quidsi, the parent of Diapers.com, which was sold to Amazon. These factors outweigh the fact that Jet is not yet profitable, Carter said.
"The potentially dilutive nature of the Jet acquisition, that's very short term," he said. "The long-term value is buying their way into this expertise."
On a call with reporters Monday afternoon, Wal-Mart CEO Doug McMillon said his company's scale will help Jet become profitable more quickly than it could on its own.