Wal-Mart: This is why Jet.com is worth $3.3 billion

Here's what the world's largest retailer said it gains by snatching up Jet:

• A chance to quickly build out its marketplace: Wal-Mart has been working to scale its online selection to better compete with Amazon, whose vast assortment dwarfs its own. Jet.com scaled up to 12 million different products in just one year, and reached a run-rate of $1 billion in gross merchandise value;
• A set of urban, millennial shoppers: The world's largest retailer grew to its size among a different generation of shoppers, primarily located outside of cities. But Jet has a "growing customer base" of urban and millennial customers and is adding more than 400,000 people each month;
• 'Best-in-class' technology: Wal-Mart built its reputation on having the lowest prices — something that's also core to Jet. Jet.com's algorithm helps shoppers get the best deal based on their digital shopping carts, which fits nicely with Wal-Mart "everyday low price" strategy. Jet has also figured out how to ship products in a cost-efficient manner;
• Attractive brands: Jet works with more than 2,400 retailers and partners, which will again help Wal-Mart broaden its selection.

"We're looking for ways to lower prices, broaden our assortment and offer the simplest, easiest shopping experience because that's what our customers want," Wal-Mart CEO Doug McMillon said while announcing the deal.

Moody's lead retail analyst Charlie O'Shea said spending $3.3 billion on Jet makes sense for the cash-rich firm.

"While it will likely be awhile before the return calculus can be assessed, Wal-Mart's financial strength and flexibility, in tandem with its excellent liquidity, give the company plenty of time from a credit perspective to integrate and leverage the legacy Jet business," O'Shea said.

However, O'Shea doesn't think the deal will place much strain on Amazon. Wal-Mart has been working to jumpstart its slow-growing digital business as its online-only competitor gets stronger — and profitable.

In the first quarter, Wal-Mart's global online sales increased just 7 percent, compared with a 17 percent lift in the prior-year quarter. Amazon grew its global e-commerce sales by 25 percent in that same quarter.

Roughly 54 percent of Amazon shoppers are loyal Prime members, according to new data from Cowen & Co. That's up from 48 percent one year ago and marks an all-time high.

Wal-Mart plans to pay $3 billion in cash over time for Jet. An additional $300 million of its shares to be paid over time as well. Terms of those payments were not disclosed.