Commentary

Delta Had Its Song --- Was Jet.com Walmart's Song?

Walmart just made some big announcements in its earnings call this week. Ecommerce sales up 74%. Same-store sales up 10% (which is enormous, given the scale of its business). It also hired 200,000 new employees.

For sure, this global pandemic is delivering a massive silver lining for Walmart -- and it seems to have finally found its footing in ecommerce. Could it be that its $3.3 billion acquisition of jet.com is now paying off? Maybe not. In the same earnings call, the company also announced it's actually shutting down Jet.com.

OK, then, if it wasn’t a big success in and of itself, maybe Jet.com was for Walmart what Song was for Delta?

Song, you may remember, was the hip, low-fare airline that Delta launched in 2003 to counter upstarts like JetBlue and Virgin America. Song is long gone, shuttered after only five years. Delta was better after that, and has given much credit to Song for showing it the way.

Digital transformation has been big at Walmart for some time. It has operated Walmart Labs out of Silicon Valley’s San Mateo since 2005. But the acquisition of Jet.com and its base in New Jersey was different. It was a high-profile ecommerce business, not just a lab, and almost immediately, it was used to buy a number of D2C brands like Bonobos, Eloquii, Moosejaw and Modcloth.

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But, like Walmart Labs, Jet.com had lots of friction with Bentonville, Arkansas, the center of Walmart’s world. And the word “lots” is an understatement.

I don’t think Walmart’s “Song” was Jet.com, even though I'm sure the retailer learned a lot from the e-tailer.

Instead, Walmart’s good financial news was due to Walmart’s decades-old move into groceries, accelerated over the past years, capped off by its repositioning Walmart.com not as an Amazon clone, but as a hybrid online order and pick-up or delivery service.

Why is Walmart winning today when so many retailers and malls are failing? Because it is focused on selling everything consumers need, not just some things. You might say it took a page out of Jeff Bezos’ book. But, as Brad Stone told us in his book about Amazon, “The Everything Store,” it was Bezos who took a page out of Sam Walton’s autobiography when he expanded Amazon into selling all the goods people need, not just books. Jeff copied Sam.

We in New York may have been focused on Jet.com. Its boxes were everywhere. But all I needed to do was listen to my mother. She still lives in the small coal town in the Allegheny Mountains of western Pennsylvania where I grew up. Last year, she started telling me about how everyone in town was now ordering their groceries online from Walmart, a very new phenomenon.

Most folks in town had never even ordered online before. Now, they were discovering they could order groceries in advance, and get them on their way home. A huge times savings. They weren’t using Jet.com. My mother had never even heard of it.

I'm sure that Jet.com catalyzed Walmart’s move into omnichannel commerce, but I give its move into groceries years ago much more credit.  

Of course, it doesn’t matter what caused Walmart to do what it did. Its business has dramatically accelerated during this crisis, and it now not only has the country’s largest and rejuvenated retail brand, but is also a much more important player in the ecommerce space.

What do you think? Was Jet.com Walmart’s Song? Or, rather, was Jet.com just the right kind of New Jersey irritant to kick Bentonville into gear?

1 comment about "Delta Had Its Song --- Was Jet.com Walmart's Song?".
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  1. Ron Kurtz from American Affluence Research Center, May 22, 2020 at 9:32 p.m.

    Given the timing invovled and Delta's attitude toward economy passengers, I am not sure they learned much from Song. Seems Delta's impressive financials are more a function of little or no real competition in the industry. 

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