Bloomberg reports this morning that Walmart plans to end its Jet fresh food delivery business in New York City, and will close a Bronx warehouse that served as a base for the service.
The decision comes just a year after it was launched.
According to Bloomberg, "Jet - which will continue to sell dry groceries like cereal and other general merchandise - will inform customers of the news Friday and fulfill any existing orders already placed."
The Bloomberg story says that "since its launch last fall, Jet’s fresh-food service has struggled, according to three people familiar with the business. The company has resorted to raising prices to offset the hefty costs of fulfilling orders in the nation’s biggest city. Key executives left, and in recent months items like avocados and strawberries have been out of stock."
The move also reflects the reality that as an entity within Walmart, Jet seems to be losing currency and the culture battle with the bricks-and-mortar bureaucracy that dominates the world's largest retailer.
Walmart bought Jet for $3.3 billion 2016 - and with it, acquired the services of its founder, Marc Lore, who has been running Walmart's US e-commerce businesses. The goal was "to reach urban millennial," the story notes, and "the company’s online revenue has increased -- but most of the unit’s success has come from its popular curbside grocery pickup service, which is cheaper to operate than home delivery.
"Jet’s customer traffic, sales and overall relevance inside Walmart’s sprawling retail empire, meanwhile, have dwindled. Its staff was fully integrated into Walmart over the summer and the parent is losing patience with some of the expensive online ventures that generate buzz but crimp profits."
Some context: "Jet debuted what it dubbed its “City Grocery Experience” last September, opening a 200,000-square-foot distribution center in the Bronx, hiring executives from companies like PepsiCo Inc. and splashing ads over New York City buses and subway stations. Jet hoped to lure New Yorkers away from established online-grocery players like Fresh Direct, Ahold Delhaize’s Peapod and Amazon.com Inc., in part by offering upscale local brands such as Orwashers breads. Jet planned to expand the service to other cities."
You can read the entire story and analysis here.
The decision comes just a year after it was launched.
According to Bloomberg, "Jet - which will continue to sell dry groceries like cereal and other general merchandise - will inform customers of the news Friday and fulfill any existing orders already placed."
The Bloomberg story says that "since its launch last fall, Jet’s fresh-food service has struggled, according to three people familiar with the business. The company has resorted to raising prices to offset the hefty costs of fulfilling orders in the nation’s biggest city. Key executives left, and in recent months items like avocados and strawberries have been out of stock."
The move also reflects the reality that as an entity within Walmart, Jet seems to be losing currency and the culture battle with the bricks-and-mortar bureaucracy that dominates the world's largest retailer.
Walmart bought Jet for $3.3 billion 2016 - and with it, acquired the services of its founder, Marc Lore, who has been running Walmart's US e-commerce businesses. The goal was "to reach urban millennial," the story notes, and "the company’s online revenue has increased -- but most of the unit’s success has come from its popular curbside grocery pickup service, which is cheaper to operate than home delivery.
"Jet’s customer traffic, sales and overall relevance inside Walmart’s sprawling retail empire, meanwhile, have dwindled. Its staff was fully integrated into Walmart over the summer and the parent is losing patience with some of the expensive online ventures that generate buzz but crimp profits."
Some context: "Jet debuted what it dubbed its “City Grocery Experience” last September, opening a 200,000-square-foot distribution center in the Bronx, hiring executives from companies like PepsiCo Inc. and splashing ads over New York City buses and subway stations. Jet hoped to lure New Yorkers away from established online-grocery players like Fresh Direct, Ahold Delhaize’s Peapod and Amazon.com Inc., in part by offering upscale local brands such as Orwashers breads. Jet planned to expand the service to other cities."
You can read the entire story and analysis here.
- KC's View:
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It is interesting to watch Walmart make these moves. The general perception is that it has been far more nimble in its various e-commerce-centric moves than might've been expected, but clearly there also have been some stumbles, as Walmart sells off or looks for partners for some of its non-core e-commerce businesses.
Hard to imagine, for example, that the Jetblack concierge business stays afloat in NYC if they can't keep the Jet fresh food delivery business going. Hard to imagine that they'd want to keep it afloat.
To me, this continues to illustrate a core difference between Walmart and Amazon. Amazon is developing a broader ecosystem with retail as a major component, while Walmart is and always will be a retailer - looking to sell stuff, more stuff, and even more stuff. They'll experiment and test the limits far more than in the not-so-distant past, but at the end of the day they know who they are and what they do and what the core business and priorities are.
The thing is, this also tells us something about the ability of retailers other than Walmart to innovate and invest in tech. If Walmart can't make this work or play the long game, how will other retailers with fewer resources?
There's going to be a lot of speculation that with every one of these moves, Walmart gets closer to the day when it will separate from Marc Lore … who will take his money and go off to plan his next business, which will get launched on the day that his non-compete runs out.
