US retail giant Walmart has announced a sweeping overhaul at Jet.com, the online start-up it acquired in 2016 for $3.3bn, after it failed to live up to the world’s largest retailer’s e-commerce ambitions.
Despite the fanfare over its purchase, Walmart said it will integrate Jet.com’s retail, technology, marketing, analytics and product teams with its own online business.
The current president of Jet.com, Simon Belsham, will leave in early August.
Walmart’s move reduces the scope and importance of Jet.com in its overall US e-commerce business, which competes directly with Amazon.com.
Jet.com, which was expected to boost Walmart’s reach particularly with city residents and millennial shoppers, has failed to become a driver for online grocery sales and growing market share in urban areas.
Walmart has put more emphasis on shopper services such as same-day delivery and kerbside pickup of groceries ordered online, focusing on food and grocery sales using those delivery methods. Jet, as a platform to sell similar items, appears to have fallen by the wayside.
The Jet overhaul is the latest sign that Walmart is attempting to change the ways it reaches shoppers using different websites and delivery methods. Earlier this year, it ended a delivery partnership with Google-backed Deliv and last year Reuters reported its struggles to use its own employees to deliver products.
RPA Perspective In 2016, Jet forecast revenue of $1 billion and according to recent estimates from consulting firm Kantar, the company’s sales actually shrank to $689 million in 2019.
The data from Kantar also shows the number of US households that shopped on Jet.com in January 2019 was 2%, down from 3% during the same period three years ago, forcing Walmart to change tack, using Jet as a platform to drive online grocery sales.
Walmart has de-prioritised the business and is focusing more on growing sales through its namesake website and offering a broader assortment of fashion and accessories through multiple smaller brands like Moosejaw, Modcloth, Bonobos, Eloquii, Hayneedle and others it has acquired in the past few years to attract millennials.
The retailer has previously said it expects losses from its online business, including Jet.com, to increase this year, without giving additional details. In the most recent quarter, Walmart’s online sales grew 37% and Marc Lore, founder of Jet.com, who Walmart hired in 2016 to run its US e-commerce operations, is still leading the business.
Going forward, Kieran Shanahan, who oversees Walmart’s food, consumables, health and wellness categories, will be responsible for Jet.com’s strategy and management, in addition to his current role.
Walmart has also been stepping up its online shopping, with improvements to both its web store and delivery options by speeding up delivery times for orders on general items.
For example, Walmart has now launched Delivery Unlimited, a subscription service costing $98 a year or $13 a month. Signing up to Delivery Unlimited means customers no longer have to pay delivery fees for each individual grocery order, though the basket will have to come to at least $30.
Walmart is offering a 15-day free trial of its subscription-based delivery service in a bid to bring customers on board.
