Walmart to Jettison Jet.com: Looking Back at Jet’s Trajectory and Impact

George Hatch

May 19, 2020

 

Newel Cobb

May 19, 2020

Walmart noted in their Q1 earnings release that Walmart U.S. ecommerce sales grew 74% in Q1 of 2020 with strong results for grocery pickup and delivery services, and the Walmart.com marketplace.

With all of that ecommerce growth, Walmart made the decision to “discontinue Jet.com.”

How should we think about this conundrum? With pandemic shopping driving huge ecommerce growth and accelerating a total retail sales shift from brick-and-mortar to online, why is Walmart shutting down their $3.3 billion dollar digitally-native brand bought to compete against Amazon?

Here I’ll take a look at the numbers and at what Walmart has said publicly via earnings presentations, press releases, and comments to the media. My colleague and former Walmart employee, Newel Cobb, will share his experience working inside Walmart.com shortly after the acquisition of Jet about his own thoughts on the origins and demise of Jet.com.

From the numbers: Jet’s trajectory

We knew this was coming

Some might argue this decision to kill Jet.com was already made when Walmart effectively absorbed the remaining Jet.com staff into new roles at Walmart as reported by the Wall Street Journal in June of 2019. I would argue the decision was made much earlier—in 2017—when monthly traffic to Jet plummeted and never reversed course. (See graph below from MarketplacePulse.)

Jet.com monthly visits, Pattern

But let’s first step back to 2016 when the acquisition of Jet.com was announced and what Walmart said they were hoping to accomplish.

Walmart was going to revive Jet initially

Doug McMillon, President and CEO, Wal-Mart Stores, Inc., said on the Aug. 8, 2016 acquisition announcement that Jet.com will enable Walmart to reach its ecommerce goals, and vice versa.

“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. It’s another jolt of entrepreneurial spirit being injected into Walmart,” McMillon said.

Indeed, Walmart got the infusion of fresh ideas and expertise specifically from the leadership team of co-founder and CEO Marc Lore, together with fellow co-founders Mike Hanrahan and Nate Faust, as well as the technology team of Jet.com. More on this later.

Per McMillon: “Walmart and Jet will maintain distinct brands, with Walmart.com focusing on delivering the company’s Everyday Low Price strategy, while Jet will continue to provide a unique and differentiated customer experience with curated assortment.”

Jet served its purpose for Walmart

I think from 2016 to present, Walmart has changed their view. I believe Walmart has realized that Jet.com was a great technology infusion and cannibalized Jet’s tech teams to accelerate Walmart’s initiatives. I believe this was a concerted decision and the pandemic accelerated the demise of Jet.com as the cost to maintain and support two distinct brands became unsustainable.

In their Q1 2020 earnings release, Walmart CFO Brett Biggs addressed why Walmart was withdrawing future year guidance for 2021, and I believe the uncertainty with the last nail in the coffin for Jet.

“The decision to withdraw guidance reflects significant uncertainty around several key external variables and their potential impact on our business and the global economy, including: the duration and intensity of the COVID- 19 health crisis globally, the length and impact of stay-at-home orders, the scale and duration of economic stimulus, employment trends and consumer confidence,” Biggs said.

What about current brands on Jet?

So what about brands—and Pattern brands—still on the platform? Well, we’ve always been cautious at recommending Jet to our partners (and even wrote previously that our honest overall opinion for brands about Jet was to avoid devoting time and resources to Jet until the data showed otherwise). This seems like a wise recommendation looking back, and we will now meet with our brand partners still selling on Jet.com to plan the transition off and final sunset of support.

Newel Cobb, a current Senior Brand Manager at Pattern who is a former Walmart.com Category Specialist and Technology product manager, shares his opinion on Jet’s demise. As a category specialist, he supported the baby category on both Walmart.com and Jet.com. As a product manager, he worked on the integration of Walmart stores with Jet.com and Walmart.com.

From a former Walmart employee: What this means

It was always a talent-grab, not a market-share grab

Many Walmart.com employees both past and present will tell you that the Jet acquisition was more of a talent grab than it was a market-share grab. Even back in 2017, everyone knew Jet would eventually go the way of the dodo.

After Jet was acquired, Walmart integrated most of the user design product managers and engineers into working on the Walmart websites and apps. This was talent that Walmart's home office in Bentonville was lacking. Bentonville had been the biggest fish in the pond for decades and needed new talent if they were to compete with the rising retail star that was Amazon.

Besides the technical product managers and engineers, one of the greatest things that Jet brought over was their senior leadership team, including Marc Lore and others. They implemented the Category Specialist Program. The idea was to hire 300 to 1,000 mini-associate buyers who would know their category so well that they could compete with the automation offered by Amazon technology. Almost all were fresh out of college, and came from top 20 schools. The name-brand Jet was instrumental in acquiring this talent.

There was little incentive to grow Jet

Most of the business managers became responsible for both Walmart and Jet’s profit and losses. However, because the Walmart P&L was often 10 times bigger than the Jet P&L for any given category, they were not incentivized to prioritize Jet.

Originally, Walmart tried to integrate Jet technologies into the Walmart systems, but eventually started from scratch. They started to use Jet warehouses for Walmart product to move forward.

Jet helped Walmart acquire “cool” brands and re-brand

Soon after the acquisition, it became clear that Jet was only really there to service the New York metropolitan area and some other metropolitan areas, as well as allow Walmart to acquire "cool" brands that were otherwise hesitant to join the website.

The idea was, if we could get a brand like Nike on Jet, we could get them on Walmart.com as well. Walmart also used the Jet name to acquire more top talent that were otherwise hesitant to attach their name to Walmart. Jet also allowed Walmart to experiment with cool ideas such as JetBlack without tarnishing the Walmart brand.

As time went on, Walmart.com learned to re-brand themselves as more than just a local super-center's online website. As their experience became more premium, the need for Jet became less and less. With the exception of some original quirks (such as Save As You Buy), Walmart.com used Jet's talent to become what Jet was aiming to be.

Our opinion? The Jet acquisition was not a failure

Overall, the Jet acquisition was not a failure, as the culture and flavor of Jet defined what Walmart.com has become today.

We hope this was an informative look back at Jet.com and look forward to continuing to test and learn as we help our brand partners with profitable ecommerce growth and control on any marketplace. Contact us with any questions, comments, or to let us know what new trends you’re seeing in ecommerce.

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Amazon's Sponsored Product ads
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What Are Amazon’s Advertising Products? Sponsored Product, Brand, & Display Ads

What Are Amazon’s Advertising Products? Sponsored Product, Brand, & Display Ads

Utilizing Amazon sponsored ads can be a smart way for a brand to drive greater traffic to a product listing and start increasing sales. While many brands still struggle to manage their advertising strategies, 30% of Amazon brand sellers increased their advertising budgets in 2022. As ecommerce executives (or even on the nose with VPs of ecommerce?)  approve their 2023 advertising budgets, it may be worth it to take a look at Amazon’s advertising products and the benefit they may have on increasing conversions. 

​​Pattern is the premier ecommerce accelerator with all of the expertise, data-driven insights, and technology brands need to gain control on Amazon and maintain their competitive niche. We know the high value of and how to utilize Amazon’s advertising products to drive the most traffic and conversions to benefit and accelerate your brand.

Here are Amazon’s three main advertising products you should know about in order to drive listing traffic to your products and increase conversions: 

For a brand executive who is selling their product on Amazon, you may not already know the differences between campaign type, so we will walk you through the differences and uses for each of these three ad campaigns.

Sponsored Product Ads

Sponsored Products are a mid-funnel advertising strategy that gives visibility to products above the top organic listings (see example below). This strategy uses custom keywords to get products in front of the consumers who are searching for them, however it can be used to capture new audiences as well.These cost-per-click (CPC) ads require no additional copy or images, but usually receive the most interaction of the campaigns and need to be monitored closely.

As you can see, these ads look just like an organic listing, however they say, “Sponsored,” on them. These types of ads can be especially effective forms of advertising because they tend to blend in with the organic results around them. With Sponsored Products, you can get your products in front of qualified customers who are searching for your product in such a way that doesn’t make them feel like they are being served an advertisement.

Sponsored Brand Ads

Sponsored Brand Ads are a top-of-funnel brand awareness tool and function on keywords. This ad format helps show a customer what they may be in need of and where to get it.  Commonly used to promote product lines or best sellers, a Sponsored Brand ad shows up as a banner above the search results (see example below). This type of ad requires that the brand showcase at least three separate products.

Unlike other campaigns used on the Amazon platform, Sponsored Brand ads require ad copy and a unique logo. These ads also can take customers to a custom landing page, or a page on the brand store, that way they get a clear and overall picture about who your brand is, what other products you sell, and why they can trust your brand

Sponsored Display Ads

Sponsored Display ads can be a tactic for top, middle, or bottom of the advertising funnel due to its varying targeting abilities. Although most commonly found under the bullet points of a detail page, these ads can also show in emails, newsletters, and even more locations off platform.

Unlike the previous ad campaigns discussed, sponsored display ads can target shopping behaviors, like repeat purchasers, similar product purchasers, and even people who viewed the detail page but did not buy. Sponsored Display ads help customers discover your brand, drive awareness, and create loyalty. 

The example above shows just one of the many placements Sponsored Display has.

Accelerate Your Sponsored Products With Pattern 

Rather than competing with each other, each of the three sponsored ad products focus on a different section of the sales funnel, allowing you to target your customers and hit your sales numbers, all while edging out possible competitors. When brands use these advertising campaigns, they can better optimize their ad budget to improve ROAS and build revenue. 

At Pattern, we have all the resources to help your brand build successful advertising and digital marketing campaigns on Amazon so you can increase traffic and conversions, which will in turn increase your revenue

Global Ecommerce Weekly News: 27th September 2022
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Global Ecommerce Weekly News: 27th September 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon drives renewable energy push with 71 new projects Amazon is planning to add 2.7 gigawatts of clean energy capacity through a couple of new projects as the company attempts to use 100% renewable energy by 2025. The ecommerce business will soon have a total of 329 renewable energy projects, generating 50,000 gigawatt hours of clean energy, which is equivalent to powering 4.6 million US homes every year. [Read more on Reuters](https://www.reuters.com/business/sustainable-business/amazon-drives-renewable-energy-push-with-71-new-projects-2022-09-21/) Amazon launches Prime Early Access Sale Amazon is launching a new 2-day shopping event for its Prime members only, beginning on the 11th of October. Across 15 countries, Prime customers will have access to the shopping event, with thousands of deals on offer globall, ranging from fashion to electronics to essentials. The event has the purpose of giving Prime users the chance to spread the cost of items over the winter months, 6 weeks ahead of Black Friday. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/26/prime-early-access-sale/) --- Other Marketplace News --- Shopify unveils new localisation tool Shopify is launching a new localisation tool, called Translate & Adapt, which works with Shopify Markets to offer localisation for sellers who are looking to expand into new markets. The tool translates a user’s online store into different languages, including product pages and information pages. Merchants are also able to create different shipping terms for each market using the new tool, which allows international expansion and offers a more localised consumer experience, unveiling new potential. [Read more on Ecommerce News](https://ecommercenews.eu/shopify-launches-new-localisation-tool/) Etsy is set to invest hundreds of millions into its marketing platform Etsy CEO claims that the company is on route to spend more than $570 million USD on marketing this year. Even during a time of macroeconomic pressure, inflation and rising interest rates, the company is preparing itself and its sellers for the upcoming holiday season and is focused on retaining interest from buyers. [Read more on Yahoo News](https://uk.news.yahoo.com/etsy-600-million-on-marketing-ceo-154054219.html) --- Other Ecommerce News --- Meta looks to cut costs by 10% in the coming months Meta employees are facing job redundancies as the company plans to cut its costs by 10% over the next few months. Meta reported a 22% YoY increase in costs and expenses, totalling over $20 billion USD. The cuts are expected to come in the form of job redundancies as a result of department reorganisations rather than formal layoffs. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/22/meta-to-slash-costs-by-10-over-coming-months/) DHL teams up with Quadient to offer smart locker deliveries in the UK DHL and tech company, Quadient, have partnered to offer smart lockers parcel pick-up throughout the UK. The new contactless, secure locker stations will give recipients more choice and flexibility to receive their parcels at a time and location best suited to them. The partnership plans to install 500 locker stations across the country by the end of 2022. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/21/dhl-partners-with-quadient-to-offer-smart-locker-delivery/) The online fashion market is set to be worth nearly $170 billion USD in 2025 The European online fashion retail market is set to grow 50% by 2025, with an online turnover of $170 billion USD, which is 33% of the retail branch’s total. Cross-border marketplaces prove to be the largest drivers of this growth, with online websites and apps like Vinted largely pushing the market’s online growth. Zalando recently became the largest cross-border fashion retailer/marketplace, responsible for 11.7% of the online market’s share. [Read more on Ecommerce News](https://ecommercenews.eu/online-fashion-market-worth-e175-billion-in-2025/)

Top 5 Ways to Prepare for Peak with Google Ads
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Top 5 Ways to Prepare for Peak with Google Ads

Peak season is almost upon us and with all signs pointing to it starting earlier than ever, with Christmas gifting searches now ramping up in August and September, it’s time to start preparing for peak. In this article, we’re sharing our top five tips for planning and preparing for peak season with Google Ads and the strategies required to get your Paid Search ready so you can drive success over this crucial period.

1. Go Early

In 2021, gifting search terms started increasing in popularity in August. The general trend is that people are looking, researching and weighing their options early, so it’s best to start your Paid activity early to ensure that you’re capturing that early research traffic. This will help drive revenue alongside aiding those consumers who are in their research phase.

From 2020 to 2021, spend during Cyber Week actually only rose 2% but in the weeks leading up to it, it increased by 16%. However, Cyber Week is still the biggest period during the latter half of the year, accounting for 23% of all online spend by consumers over peak. Being prepared and starting early will help you to maximise your time during this period.

2. Get Ready for Privacy Changes

 According to Google, 48% of global consumers have stopped buying or using a service due to privacy concerns. Privacy is front of mind when consumers are shopping online and we know that Google is phasing out 3rd party cookies in 2023. This is going to make it much harder to track users online and it’s something that brands need to think about this now – waiting isn’t an option.

From a Google Ads point of view, you want to ensure you have set up the Google Ads tag across your site and have enabled ‘Enhanced Conversions’, which ensures all conversions are tracked and allows you to monitor other actions such as ‘Add to Cart.’ This is relatively easy to set up, especially if you use ‘Google Tag Manager’.

It’s also vitally important that you build up your first-party data during this time as this is data you own and it can be used when targeting consumers that have provided your brand with their email address. Pattern’s own experience shows that by segmenting and using first-party data, you can see a 10% improvement in revenue and ROI.

3. Ensure Consumers Can Discover your Brand

A full-funnel approach is now more important than ever as consumers become more discerning and have more choices than ever of where to shop.

Pattern has seen success with Google Ads’ ‘Discovery Campaigns’ (image-based ads that appear on Google platforms such as Gmail and the Google app), which have driven success both from a traffic and revenue perspective.

The performance of these campaigns is significantly enhanced by adopting a segmented and nuanced approach to first-party data and incorporating these into your campaigns. Other options for a full-funnel approach include YouTube and testing bidding on keywords that are more representative of the research phase. (e.g. ‘best baby clothes’ for a baby clothes brand)

4. Get Moving with Performance Max

Earlier this year, Google announced that they were moving away from Smart Shopping and launched Performance Max. This is a new campaign type that incorporates features and placements from Smart Shopping but expands them onto other platforms such as Gmail but also alternative creative options, such as images and videos.

Since Google has already started automatically upgrading Smart Shopping campaigns to Performance Max, expect to see some fluctuations in the first 2 weeks following the switch over but results generally seem positive. We recommend upgrading sooner rather than later to limit any potential impact to peak period.

5. Flight Budgets Accordingly

Peak period will be even more competitive than in 2021 and you’ll need your budgets to support this period, we recommend boosting budgets in October to start capturing that early peak traffic. As we enter November and the Cyber Period, start early and make sure you are capturing those consumers looking for early bargains, ensuring you are being nimble in your optimisations and reacting to the data that you are seeing.

Overall, peak period is vital to help drive your sales and by preparing early, you will see strong results and drive success for your brand. If you want to discuss how your brand can navigate this next peak period, contact us to discuss your options with our performance team now.