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.

Explore Our Ecommerce Resource Library

Find relevant content to accelerate your ecommerce business. Stay on top of industry trends and best practices.

Sept 6, 2022

Global Ecommerce Weekly News: 6th September 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon announces new inventory and distribution service, AWD Amazon has launched Amazon Warehousing and Distribution (AWD), providing inventory and distribution services to its sellers as a means of addressing current supply chain issues. AWD is now available for sellers using Fulfilment by Amazon (FBA), i.e. outsourcing their fulfilment to the platform. Amazon has plans to expand the service outside the platform in 2023. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/02/amazon-introduces-new-service-to-help-solve-supply-chain-challenges/) Amazon Web Services (AWS) launches in the UAE AWS, Amazon’s cloud-computing platform offering, has launched its second region in the Middle East and now provides its services in the UAE. The move will now allow anyone in the UAE who utilises cloud technologies to harness AWS’s advanced platforms and APIs. An estimated $11 billion USD is expected to be added to the UAE’s GDP thanks to the implementation, with an average of 6,000 external vendor jobs to be created annually. AWS is now available in 87 zones across 27 regions, with sights set on expanding further across Australia, Canada, India, Israel, New Zealand, Spain, and Switzerland. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/30/amazon-web-services-launches-region-in-uae/) --- Other Marketplace News --- Lazada to launch in Europe Alibaba-owned ecommerce platform Lazada is set to launch in Europe, marking a refreshed internationalisation push from the company. The move follows toughening economic conditions and performance in Southeast Asia, advancing the need to tap overseas markets. In Europe, Lazada will face tough competition from giants like Amazon and Zalando. Lazada’s exact entry strategy is to be confirmed and will be reliant on macroeconomic and market conditions, according to Lazada CEO James Dong. [Read more on DigitalCommerce360](https://www.digitalcommerce360.com/2022/09/01/alibabas-lazada-to-take-on-amazon-zalando-in-europe-push/) Chinese ecommerce giant Pinduoduo to launch cross-border platform in the United States Pinduoduo, a Chinese ecommerce giant rivalling Alibaba and JD, has announced it will be launching a new cross-border ecommerce platform. The marketplace is set to launch in the United States next month, as part of the company’s larger push into new markets. Pinduoduo found success in China thanks to its rock-bottom price offerings and harnessing of social commerce marketing, emulating strategies similar to fast-fashion giant Shein. [Read more on Yahoo Finance](https://uk.finance.yahoo.com/news/pinduoduo-launch-international-e-commerce-034129263.html) Alibaba launches its biggest B2B sales event, ‘Super September’ China ecommerce giant, Alibaba, has now launched its month-long B2B sales event ‘Super September’. The event provides 40 million buyers and 200,000 suppliers with the ability to connect on the platform, showcasing a ‘virtually unlimited’ number of products. The event hopes to foster new cross-border business relationships to tackle supply chain challenges currently faced by businesses. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/01/alibaba-launches-super-september-b2b-sales-event/) --- Other Ecommerce News --- Klarna’s losses quadruple in first half of 2022 BNPL provider, Klarna, has reported losses of $581 million USD for the first half of 2022. This figure is almost four times larger than a year earlier, where $129 million USD in losses were reported. The company attributes the losses to employee costs, technology investments, and rising credit losses. Klarna’s figure reporting comes amidst worsening economic conditions, fresh legal and regulatory scrutiny, and pressure from Big Tech competitors. [Read more on The Financial Times](https://www.ft.com/content/483451db-9221-4ca4-83a6-b4ddc6bfcfbb) [Read more on the Guardian](https://www.theguardian.com/business/2022/aug/31/klarna-losses-more-than-triple-as-consumer-spending-slows) One fifth of Snap employees to be laid off amidst poor financial performance Social media platform Snap (‘Snapchat’) has announced it will be laying off 20% of its employees and closing out a number of projects following a year of poor financial results.The move will see 1,200 employees globally lose their jobs, saving the company an estimated $500 million USD in costs. Snap is currently valued at $20 billion, an 84% decrease from its valuation of $130 billion last year. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/01/snap-to-lay-off-20-of-its-workforce-and-wind-down-a-number-of-projects/)
Aug 30, 2022

Global Ecommerce Weekly News: 30th August 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon set to shut down Amazon Care Amazon is closing its telehealth service, Amazon Care, which launched in 2019 as a trial program for its headquartered employees. Later the service was rolled out nationwide for employees and other companies. The ecommerce giant has now made the decision to move away from the healthcare space, believing it was not the right long-term solution for its enterprise customers. [Read more on CNBC](https://www.cnbc.com/2022/08/24/amazon-is-shutting-down-amazon-care-telehealth-service.html) Peloton closes new deal to sell on Amazon Following a recent deal, Amazon customers will soon be able to buy Peloton fitness equipment on the marketplace, marking Peleton’s first move outside a direct-to-consumer model. According to Peloton’s CCO, there are already around half a million searches on Amazon for Peloton products every month, despite having no presence on the marketplace. Some key products include the original Peloton Bike, retailing for $1,445 and Peloton Guide for $295. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/24/peloton-strikes-deal-to-sell-fitness-equipment-on-amazon/) --- Other Marketplace News --- 60% of Malaysians are buying from local sellers on Shopee A recent survey of nearly 3,500 respondents found that nearly half of the shoppers prefer to purchase from local sellers due to shorter delivery times. Other shoppers decide to shop locally due to the quality of the products made in Malaysia and an interest in keeping the economy running. As a result, smaller local merchants have been able to grow their businesses, and shoppers benefit from shorter delivery times, products of high quality and supporting local businesses. [Read more on The Malaysian Reserve](https://themalaysianreserve.com/2022/08/25/around-60-malaysians-are-buying-from-local-sellers-on-shopee/) Flipkart’s social commerce platform Shopsy crosses 100 million users Flipkart launched a social commerce arm, Shopsy, in July of last year, which has now surpassed 100 million users, ahead of its target timeline being the end of 2022. This acquisition of new users has made Shopsy one of the largest platforms of its kind in the country, and is expected to onboard a further 100 million by the end of 2023. The platform is centred around boosting local entrepreneurship and powering ecommerce for consumers across tier 2+ regions where users face challenges around trust and navigation when shopping online. [Read more on Business Standard](https://www.business-standard.com/article/companies/flipkart-s-social-commerce-platform-shopsy-hits-100-million-users-1220828006851.html) Meta joins Amazon and Walmart in bid for Indian ecommerce market Amazon mentioned earlier in the year that it would be building a logistics division in-house through its purchase of a 51% stake in Ecom Express, an end-to-end logistics firm, to make ecommerce deliveries more efficient in the country. Walmart operates Flipkart in India and is set to continue its investment in the marketplace. In an effort to compete in the Indian ecommerce market, Meta has partnered with Indian ecommerce company, JioMart, to offer customers a grocery shopping platform within its WhatsApp chat feature. [Read more on Pymnts](https://www.pymnts.com/news/retail/2022/meta-joins-amazon-walmart-indian-ecommerce-market/) --- Other Ecommerce News --- Ecommerce in Spain worth €57.7 billion in 2021 Spanish ecommerce saw 11.7% growth compared to last year, largely attributed to cross-border sales. In the final quarter of 2021, ecommerce sales in Spain were at €16.9 billion euros, at least 60% of which came from cross-border sales. Transactions from foreign locations to Spain generated a turnover of €1.56 billion in Q4, a growth of 27.7% compared to Q4 a year before. [Read more on Ecommerce News](https://ecommercenews.eu/ecommerce-in-spain-was-worth-e57-7-billion-in-2021/)
Aug 23, 2022

Global Ecommerce Weekly News: 23rd August 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon to add mental health support to primary-care service Amazon is set to move into mental health therapy with its primary-care division, following its recent acquisition deal of One Medical. The plan is to partner with virtual behavioural therapy service, Ginger, to offer its Amazon Care users with on-demand access to mental health services, licensed therapists and psychiatrists. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/11/amazon-plans-to-add-mental-health-support-to-primary-care-service/) GMB union calls for £15 an hour minimum pay at UK Amazon warehouses Amazon recently offered its warehouse workers a 3% pay rise, which in comparison to the June inflation rate of 9.4% left employees disappointed. Following this, hundreds of Amazon warehouse workers stopped work last week, protesting against the minimal pay increase, seeking a minimum of £15 an hour. Recent protests consisting of employee walkouts and sit-ins aim to get a better offer out of Amazon. [Read more on The Guardian](https://www.theguardian.com/technology/2022/aug/09/gmb-calls-for-15-an-hour-minimum-pay-at-amazon-warehouses-in-uk) Amazon third-party sellers have received their first-ever holiday fee hike Amazon’s third-party marketplaces account for close to half of the company’s online sales. The company introduced a 5% fuel and inflation charge to its third-party sellers earlier this year, and has now implemented another inflation increase charge. Commencing 14 October, any seller who uses Amazon’s fulfilment service is subject to the price hike, which is set to be an additional 35 cents per item for products sold in the US and Canada. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/17/amazon-third-party-sellers-have-received-their-first-ever-holiday-fee-hike/) Amazon puts a pause on UK grocery shop roll-out as the cost of living increases Amazon has slowed down on its UK roll-out of till-free Amazon Fresh grocery stores following disappointing sales and the rise in cost of living. Allegedly, the company is no longer looking for potential sites to expand and if more stores are opened, they will likely no longer use a till-free system, as consumers become more cautious about spending. [Read more on The Telegraph](https://www.telegraph.co.uk/business/2022/08/21/amazon-pauses-uk-grocery-shop-roll-out-following-disappointing/) --- Other Marketplace News --- Shopee overtakes Alibaba across international markets Shopee has surpassed Alibaba and taken the top spot for sales outside of China. Singapore-based marketplace saw a year-on-year increase of 51.4% at the end of Q2 of this year, while Alibaba saw a 3% drop during the same time period. This can be seen as a promising development for start-ups and their ability to compete with some of the largest ecommerce giants in the market. [Read more on Exchange Wire](https://www.exchangewire.com/blog/2022/08/18/shopee-surpasses-alibaba-in-international-sales-amazon-searches-for-entertainment-exec/) H&M reopens its official store to Alibaba’s Tmall ecommerce platform It has been nearly 18 months since Alibaba removed H&M from its Tmall platform, following H&M’s criticism of human rights abuses in Xinjiang. It is estimated that over a million people, predominantly minorities in the area, have been unlawfully detained in camps across the city. Brands including Nike, Adidas, Burberry and Converse were swept up in the controversy, however H&M was one of the first to be targeted for speaking out about the issue. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/16/hm-returns-to-alibabas-tmall-platform-16-months-after-xinjiang-controversy/) Klarna launches new feature allowing UK consumers to view full online order history Buy-now-pay-later company, Klarna, has launched a new feature on its shopping app, which allows UK consumers to view their full online order history, regardless of whether they purchased the product using Klarna. The feature also shows delivery tracking and aids consumers in managing their online purchases more conveniently. [Read more on The Industry](https://www.theindustry.fashion/klarna-launches-new-feature-allowing-uk-consumers-to-view-full-online-order-history/) --- Other Ecommerce News --- Online marketplaces responsible for £280 billion business turnover in the UK Nearly 900,000 UK businesses are currently selling on online marketplaces, generating an estimated £282 billion worth of sales each year. This figure represents 6% of the UK’s annual business turnover, highlighting the notable contribution that marketplaces make to the UK economy, along with the potential for further growth in this area. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/09/online-marketplaces-responsible-for-280-billion-business-turnover-in-uk/)