Does Walmart need to keep Jet.com around?
When Walmart spent more than $3 billion to buy Jet.com in 2016, the conventional wisdom was that the purchase was more about acquiring the talent behind the e-tailer than the site itself. Over the past year-and-a-half, industry watchers have kept an eye on Jet to see if Walmart remains committed to the site. A recent Bloomberg report raises questions on that very subject.
Jet’s traffic though the first three months of 2018 is down significantly vs. the same time frame last year, according to research by SimilarWeb. The site’s 60 percent year-over-year decline in March coincided with a corporate decision by Walmart to invest more in marketing Walmart.com while cutting support for Jet. Traffic to Walmart’s main site was up five percent last month.
“So long as Walmart’s numbers are strong it doesn’t matter what happens to Jet,” Sucharita Kodali, an analyst at Forrester Research, told Bloomberg. “This makes it easy to sunset Jet and focus on Walmart. I’m not sure, honestly, why Jet is even still around.”
Jet spokesperson Meredith Klein took issue with the inference taken from the SimilarWeb data, pointing out that the site’s strategy has focused on investing in urban markets where it has continued to increase its numbers of new customers and increased the length of the average visit, as well.
Ms. Klein’s response echoes remarks made by Walmart CEO Doug McMillon on the retailer’s second quarter earnings call.
“Jet.com complements Walmart.com nicely. Walmart.com, including online grocery, is and has been the key driver of our ecommerce growth and that will continue,” said Mr. McMillon (via Seeking Alpha). “The Jet brand over indexed with higher-income, urban, millennial customers when we made the acquisition, and we intend to build on that strength going forward.”
Walmart’s CEO added, “The cost to acquire a new customer on a nationwide basis is cheaper with the Walmart brand so we’ve been investing more in Walmart.com on a national basis and reducing marketing investment in Jet, except in certain urban markets.”
- Walmart’s Jet.com Traffic Declines – Bloomberg
- Walmart’s CEO Doug McMillon on Q4 2018 Results (Earnings Call Transcript) – Seeking Alpha
- Why did Walmart buy Jet.com? – RetailWire
DISCUSSION QUESTION: What role, if any, do you see Jet.com filling within Walmart’s business portfolio going forward? Do you foresee Walmart.com being able to appeal to young, urban consumers in cities such as New York or San Francisco in the future?