One year ago, Jet.com launched with much fanfare as an ecommerce website that could pose a threat to Amazon. Now the Wall Street Journal is reporting the company is in talks to sell itself to Walmart after facing significant challenges.
Jet was counting on a membership model that it quickly abandoned “after determining customers would resist the fee,” according to the Wall Street Journal.
Remarkably, the Wall Street Journal found Jet ended up with what any retailer would recognize as an unsustainable business model: “The Journal’s profile illustrated the buy-high, sell-low strategy by placing 22 test orders, 12 of which came from third-party retailers including Wal-Mart. Jet charged $276 for those items, but paid $518 to buy and ship them, losing about $242.”
Keith Anderson, VP of strategy and insights at Profitero, shared some thoughts about a Walmart-Jet matchup. Profitero provides brands and retailers with insights and analytics about online performance.
Anderson said Walmart offers Jet superior distribution and logistics assets and capabilities – one of Jet’s weakest points – as well as buying power and a fairly well-aligned strategic owner. The two have a similar focus on low prices on both everyday essentials and higher-margin discretionary goods, he said.
At the same time, Jet offers Walmart talent and a deep competitive insight into Amazon’s operating model. It also offers a potentially new customer base – Jet has aggressively targeted shoppers in large urban metros.
Jet also has an emerging third-party marketplace platform, but that raises the question, Anderson said – how would Walmart integrate its 3P marketplace with Jet’s?
You can also dig into some data about Jet.com at Slice Intelligence, which published a review of Jet’s first 8 months back in April.
