This week, the rumor mill in the media has exploded with stories (apparently first reported in the Wall Street Journal), indicating giant Walmart is in negotiations to buy relative newcomer Jet.com for the somewhat staggering price of $3 billion.

Granted, that’s almost small change for a retailer with annual revenues over $400 billion, but it’s still quite a valuation for a company that has raised $500 million, burned much of it, and has brought in unknown sales dollars.Is it worth it?And should retailers be worried?

I believe the threat to most retailers is the same as it was before: customers are moving online and it’s imperative to figure out two things: 1) how to stop the race to the bottom, where no one wins, and 2) how to reinvigorate the in-store experience to slow those defections without giving away the store (pun intended).

But the acquisition of Jet by Walmart could pose a threat to the previously unstoppable revenue growth of Amazon.com’s retail operations. Most analysts agree that Jet’s demographics are more in line with Amazon’s than Walmart.com’s. There is simply a large swath of the population that will not shop at anything called “Walmart. “The reasons are numerous, and I’m not going to go into them here. For simplicity’s sake, let’s just say that it doesn’t suit their self-image.

Jet does not have the same connotations.It’s smaller, newer and no one has ever posted photos of “People of Jet.com. “Amazon seems to be a favorite across a very broad demographic. Walmart has grabbed a large portion of the lower-income population, but expansion possibilities are now limited.

But demographics in and of themselves aren’t enough for anyone to worry about.What IS enough to worry about is that Walmart would bring operational scale to Jet, and a native breadth of assortment that could allow it to compete with Amazon on a more equal footing. It would give Walmart the opportunity to expand its marketplace with vendors who might otherwise not want to be associated with the behemoth.

And we haven’t yet started talking about “the algorithm, “ Jet’s secret sauce. When you search for a product on Amazon, you might see ten different listings for the exact same thing. The site helpfully lets you know if it’s available from other sellers, but then you have math calculations to do. Do I buy it for less money but pay for shipping? Do I buy it for the same money and find out it takes two weeks to arrive? It can get a little complicated and most folks (including me), will pick the item available through Amazon Prime, as long as the price is “close enough. “

Jet takes away that entire process.There is one listing for a sku and one price, and the algorithm will calculate the most appropriate seller once the entire basket is complete and the customer is ready to check out. Then the price might go down, or you might be offered alternatives to lower your prices like slower shipping.

Jet certainly had its start-up burps, like buying some products from other retailers and selling them at a loss, just to satisfy demand, but those burps seem to be behind it.Profitability as a stand-alone still seems elusive, but I think under the Walmart umbrella, it would have the opportunity to get more profitable, faster.

So the long and short of it is that most retailers have the same worries they have before. Shoppers are moving online, and we’ve trained them to be very price sensitive. Now they have yet another choice.

Should Amazon be worried? It has a fifteen year head start and millions of Prime members.I suspect as long as it keeps its prices sharp, it’ll do just fine.It may not grow at astronomical rates forever, but growth will still happen.

The rest of us really have to up our game.It’s time to reinvent that oldest of retail assets: the store.

As far as valuations…I’ve seen numbers that render me speechless over the past few months.We ooh’d and aah’d at Salesforce buying DemandWare for a 7.3 multiple of revenue.Then Oracle bought Netsuite for 12+x revenue. There was hardly anything to say about that.

Is it surprising to see someone pay that kind of multiple for a retailer?Given the algorithm, and the tech-based nature of the business, I guess I have to say no, it’s not all that surprising.When Walmart is languishing at 3% of sales coming from online, you have to expect the company to do something. Jet would be a very smart move.

And, yes, again, the rest of us really have to up our game.