Photo: Jet.com
Jet.com is stepping out of Walmart’s shadow
Walmart spent $3.3 billion to acquire Jet.com a little more than a year ago. Now, the e-tailer is making moves that its management believes will distinguish it from its parent company and make it a force in fashion, grocery and beyond.
According to a Wall Street Journal report, Jet will begin adding clothes from ModCloth to its site in the months ahead and will do the same with Bonobos’ line of men’s apparel next year. The moves are part of Jet’s plan to offer more upscale goods than typically found on Walmart.com.
Jet is also introducing a new premium grocery private label called Uniquely J intended to appeal to the “metro millennial consumer,” according to a Mashable report. The line, which will emphasize product quality, will become available on the site over the next two months and will include roughly 60 food and household items. Jet plans to extend the line to baby, beauty and pet products in the future.
Earlier this year, Jet opened a temporary store selling items such as organic blueberries and carrots inside STORY, a 2,000 square-foot retail concept founded by Rachel Shechtman, a former brand consultant for Kraft and TOMS shoes.
Jet also plans to get in on the “bed in a box” business, according to the Journal. In May, Walmart rival Target made a $75 million investment to gain a minority stake in Casper, the leader in the category. The deal allows customers to buy Casper beds and accessories from Target.
Heading into the holiday season, Jet announced it was offering five percent cash on orders placed between Sept. 18 and Oct. 29. Customers will earn up to $50 in JetCash that they can use for purchases during the holiday season beginning on Nov. 13. One dollar in JetCash is the equivalent to $1 spent on the site.
“This effort rewards our loyal customers with some cash towards their holiday shopping and also attracts new shoppers to check out Jet.com, letting them decide how and what to use their credit towards,” said Liza Landsman, Jet’s president, in a statement.
- Walmart’s Jet.com is launching its own line of groceries to compete with Amazon – Mashable
- Wal-Mart Tries to Take Jet.com Upscale – The Wall Street Journal
- Why did Walmart buy Jet.com? – RetailWire
- What’s the ‘STORY’ with Jet.com’s grocery store? – RetailWire
- Why is Target investing in a mattress direct seller? – RetailWire
Discussion Questions
DISCUSSION QUESTIONS: Do you think that differentiating Jet.com from Walmart.com will be key to Walmart’s digital strategy going forward? Which of Jet.com’s planned merchandising initiatives — adding ModCloth and Bonobos clothing, rolling out Uniquely J grocery private label or launching a “bed in a box” — will have the biggest positive affect on the site’s top and bottom lines?
Poll
BrainTrust
Mohamed Amer, PhD
Independent Board Member, Investor and Startup Advisor
Anne Howe
Principal, Anne Howe Associates
Jet.com is Walmart’s answer to Amazon. Allowing the business to evolve without the constraints of the Walmart brand/image is a smart move on Walmart’s part. While it’s hard to say which of the many initiatives will have the biggest impact, I’d say it’s the totality of the relentless experimentation and self-disruption that makes it a win.
The key to Walmart’s future growth is expansion into new markets — its existing market is pretty well saturated and all they can do is maintain or lose share.
So I am excited about the acquisitions of Jet, Bonobos and ModCloth because they are not targeted at Walmart’s core customer. I like that the names have not been changed and they appear to remain independent.
I suppose “bed in a box” might prove interesting, but everyone and their mother is doing those. It strikes me as more in line with Walmart’s core customer. Bring on the new brands!
Differentiating Jet makes sense. Its brand can go upscale where Walmart cannot. Using the brands that parent company Walmart owns benefits both companies. Think of this like Toyota and Lexus, with Jet being the upscale brand to Walmart’s mainstream appeal.
Innovation is the key. Whether Jet.com differentiates from Walmart is not nearly as important as keeping up the pace of innovation — to step out of Amazon’s shadow. While Amazon/Whole Foods looks to step down from premium, it is a smart counter-maneuver for Walmart/Jet.com to step up to premium products. WalJet is on the right path … keep it up. Also — don’t forget to emphasize the convenience of being able to pick it all up at one of the thousands of Walmart locations. That is an immediate win.
Jet can create (or maintain if you prefer) a separate and distinct identity from Walmart. It is electing to do so by going places Walmart has not gone before. IMHO it is no different from the fact that most consumers don’t know that a few CPG companies own many different and distinct brands. Frankly they don’t care about who owns the brand but what the brand means to them.
Jet ownership should not diminish its brand as long as Walmart leaves it alone. The danger is, as has been stated many times on RetailWire, that companies who buy other companies have a hard time not imposing their way of doing business on them.
It’s worth trying to distance Jet but there doesn’t seem to be enough substance with these tactics. Launching Uniquely J with just 60 items is paltry if they’re seriously trying to develop the brand and distinguish Jet.
Data I saw recently, indicated that Jet has spent $100 million in TV advertising yet something like only 2-3 percent of Americans know the brand and most customers are one-time shoppers — probably taking the new customer incentive and not finding enough regular value to return.
My advice: focus on getting the core offering right and drastically improving retention and awareness, else roll technology/know-how gained in the Jet acquisition into walmart.com and write off the loss.
And … It goes to show that putting out a bunch of hype and getting a lot of press about “innovations” isn’t enough to make a business viable.
If Jet.com is trying to eastablish itself as a separate entity by selling brands not sold in Walmart or by selling products from other retailers like Target, how does this help Walmart’s digital strategy? Seems to me that Jet.com needs to identify more with Walmart if it is going to help Walmart’s strategy.
I’m guessing you and I are going to be in the minority of opinion on this one Camille, so I’m just going to hide under your post if you don’t mind. 😉
This strategy makes sense for Jet — perhaps — though I’m not sure how it goes beyond just another Amazon wannabe. What it definitely does not do is help Walmart build their relevancy to value-seeking Millennials and others — the core Walmart shopper of the future. For Walmart to do that their e-commerce offerings must continue to evolve with their shopper.
Jet.com is Walmart’s on-ramp to a no-speed-limit Autobahn. It provides Walmart with a range of options that simply do not exist under the mother ship.
The Uniquely J grocery private label is a very good starting point to begin to counter Amazon’s grocery inroads. Grocery purchases are frequent and their repetitive nature is a quick way to build awareness, especially with Jet.com’s intent to target “metro Millennials.”
Having unique strengths in both properties — Jet.com’s wealthier Millennial user base and Walmart.com’s middle America user base — will be instrumental in creating a viable competitor to Amazon.
Walmart was smart in promoting Marc Lore to head of e-commerce and allowing Jet to evolve on its own.
Out of the planned merchandising activities, I see the private label brand launches as being the most compelling. Like Amazon, Jet can rely on its marketplace purchase data to identify high-velocity products to design a profitable private label assortment. However, the “star power” that ModCloth and Bonobos will bring to the platform will help attract new users in its core segment.
The autonomy in operation and further distinguishing the Jet.com brand from Walmart are smart steps. There was some blow-back from ModCloth and Bonobos customers after the acquisitions, as shoppers of those brands didn’t want to be associated with buying from Walmart for a variety of reasons. Also, rule #1 of disruptive strategy is you cannot disrupt yourself — that is, at least from within an organization’s existing confines. Allowing Jet.com to operate outside of Walmart gives them the creative breathing space they will need, while still getting fuel and air-cover from what is the world’s largest retailer.
Walmart has made it clear that they intend to do battle with Amazon, but consumers have made it clear that they like new things as far as online retail is concerned. Keeping Jet.com separate is a great idea. It’s already established and growing. Absorbing it into Walmart’s own online initiatives would leverage very little change.
As far as which individual initiatives will be most successful … It’s hard to say. I think the real benefit will come by continuing to build strong partnerships so their customers always have fresh options.
Of course, the brands have “permission” to operate in much different markets and in much different ways. One day they may come back together as a single brand, but for now letting Jet go its own way is Walmart’s best bet. As to the second question the right answer is, “All of the above.” Jet needs to innovate and create buzz in the psychographic cohorts it is targeting and that is an ongoing effort.
If Walmart wants to gain the attention of the Millennial shopper I think Jet is the best way of going about it. It seems that Millennials really do value brands with a great story, maintain a high level of corporate responsibility and deliver a high-value product. Walmart has always been in the news for good and bad reasons over the years and allowing Jet to be Jet will allow the company to have an opportunity to create its own story going forward. Brands like Kashi in the CPG sector and Line Skies in the active sports sector have done well when the parent company has let them be.
I’m not 100 percent sold on why Walmart needs to have two dot-com presences however, if Jet will allow them more flexibility with fewer constraints, then perhaps this is the right move. I do love that Walmart is reaching out to new customers with fresh product offerings. This is key. And that’s my 2 cents.
Jet.com has a lot of upside and should differentiate from Walmart as fast as it can. There is more room at the top of the online retail model than at the bottom, and the shopper perception of Jet.com branding does not need to be encumbered by Walmart’s lower-end image. Regardless of category, Jet.com can experiment with many brands that can help them create a more curated feel/experience for the shopper.
100% Jet.com needs to stand alone from Walmart but benefit from Walmart’s scale, operations, deep pockets and ability to lower prices.
No doubt that private label has the best chance to make a difference of these 3 options. Bonobos and ModCloth are cool but nothing that stands out from others in apparel space and there are literally hundreds of bed in the box competitors in that market. As Amazon, Whole Foods, Costco and even Walmart have proved over the years, private label can be a game changer if you spend time to build the brands a bit while reaping in the margins. They, like Amazon, will also be able to use data from combined power of Jet and Walmart to pick and choose product categories and specific products to attack with private label. Great move to show some ROI on $3B aside from talent and leadership acquisition.
Jet’s presence over the past year has had a great impact on modernizing Walmart’s online offerings. Now it’s time for Jet to solidify their identity in a way that pulls from Walmart’s deep pockets to experiment and still stays true their target market. My initial thought is that adding ModCloth and Bonobos products to Jet will have the biggest positive affect, but all of these moves are smart ones to widen the scope of what Jet can provide.