Commentary

Walmart Moving Its Jet.com Teams To Bentonville -- But Site Glides On

Reversing thrust on Jet.com, the online retail operation it acquired for $3.3 billion in August 2016, Walmart yesterday said it would merge all its teams -- including retail, marketing, technology, analytics and product -- under the Walmart.com banner. Jet.com will, however, continue to fly as an ecommerce presence that will be “hyper-focused” on large cities where Walmart has few or no stores.

“With the teams creating synergy and Jet becoming even more focused, we don’t have the same need for a dedicated leader, so Jet president, Simon Belsham will be supporting the Jet transition through early August,” Jet co-founder and Walmart eCommerce U.S.’s president and co-founder Marc Lore  writes  in a blog post announcing the news. 

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Then Belsham will be skedaddling and “the strategy and management of Jet will sit under Kieran Shanahan,” who has been with Walmart eCommerce since 2014 and will continue to oversee the food, consumables and health and wellness categories.

“A source close to the matter said there will be no layoffs,” reports  Brian Sozzi for Yahoo Finance, and Jet.com's headquarters will remain in Hoboken, N.J.

“Walmart’s move reduces the scope and importance of Jet.com in its overall U.S. e-commerce business, which competes with Amazon.com, according to interviews with six vendors, two consultants and three Walmart employees. Jet.com, which was expected to boost Walmart’s reach particularly with city dwellers and millennial shoppers, failed to become a driver for online grocery sales and growing market share in urban areas, the sources added,” Reuter’s Nandita Bose writes.

“Walmart has put more emphasis on shopper perks such as same-day delivery and curbside pickup of groceries ordered online, focusing on food and grocery sales using those delivery methods. Jet, as a platform to sell similar items, has fallen by the wayside, the sources added,” Bose continues.

“Jet continues to be a very valuable brand to us, and it is playing a specific role in helping Walmart reach urban customers,” Lore states. “The focus has largely been on NY so far, and we're looking at other cities where we might bring together Jet's expertise and the scale and operating model of Walmart. More to come on that,” he promises.

“Walmart has admittedly dialed back its marketing efforts for Jet, which have focused on targeting millennial customers, in order to focus more on growing Walmart.com. The company has been criticized in the past by analysts for not growing Jet sales as quickly some had hoped, and for focusing all of its investments on New York,” CNBC’s Lauren Thomas writes.

“Walmart also announced that David Echegoyen, current vice president and chief customer officer at Jet, will be moving over to Walmart’s marketing division as vice president of grocery, pickup, and delivery and services marketing in the U.S. and online,” reporting to senior vice president and CMO Barbara Messing, Thomas adds. 

Indeed, “most of Jet’s original leaders are no longer directly involved with the unit. Lore now runs all of Walmart’s U.S. online operations, while his fellow co-founders, Mike Hanrahan and Nathan Faust, have transitioned into other senior roles inside Walmart. Former president Liza Landsman left last year, while several other managers have moved on to launch their own startups,” Matthew Boyle writes for Bloomberg.

“They probably want the talent they have to focus on the Walmart brand,” Forrester Research analyst Sucharita Kodali tells Boyle. “If they keep the Jet brand alive, it would make sense to keep it for experiments.”

“When Walmart bought Jet in 2016, it was a highflying startup which raised over $500 million from investors. Before the acquisition, Jet predicted it would burn through hundreds of millions of dollars, much of that on marketing to build its shopper base. Mr. Lore won over investors in part because of his success running Diapers.com parent Quidsi Inc., which was sold to Amazon.com Inc. for about $550 million in 2010,” Sarah Nassauer reminds us  in the Wall Street Journal.

And he’s winning over the folks in Bentonville, Ark., too.

“Not only have the Jet.com people infused Walmart’s once slow-moving digital ranks with fresh thinking and speed, but Lore has fueled a rollout of Amazon-attacking same-day delivery services while meaningfully improving the online and mobile shopping experiences. Walmart’s online sales have surged pretty much every quarter after the Jet.com deal closed. So, having their team work closer with Walmart may not be a bad thing at all,” Yahoo Finance’s Sozzi opines.

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