Walmart Inc. continues to position itself to compete more effectively with Amazon. To capitalize on synergies, the Bentonville, Ark.-based giant is integrating Jet.com into Walmart U.S. e-commerce, while eliminating the role of Jet.com president, held by Simon Belsham, who will be leaving the company in August.
“Bringing together talent from Jet.com and Walmart into joint teams has created more opportunities for our business and our people,” said Marc Lore, president and chief executive officer of Walmart U.S. e-commerce. “We’re now merging the rest of our Jet teams, including retail, marketing, technology, analytics and product, among others.”
Oversight of Jet.com’s strategy and management of the site will be turned over to Kieran Shanahan, who will continue to oversee the food, consumables and health and wellness categories at walmart.com. Shanahan’s experience and relationships — he previously led the e-commerce operations of Asda in the U.K. — will be critical for the further integrated role Jet will play, Lore said.
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“This natural progression of integrating an acquisition allows us to fully leverage Walmart’s assets for Jet.com and leverage Jet.com’s talent for Walmart,” Lore added.
Walmart in 2016 acquired Jet.com for $3 billion. The two supply chain teams were combined early on, which allowed walmart.com to grow sales at a rapid pace. Working together, the teams retooled fulfillment centers, which led initially to free two-day shipping, and more recently, free next-day delivery.
“At the time that Walmart made the Jet acquisition, I said we’ll probably never know if the company underpaid or overpaid because there were so many tentacles that Jet would touch,” said Moody’s analyst Charlie O’Shea. “We’ve seen that. [Walmart] has given keys to the kingdom to Marc Lore.”
The next-stage integration of Jet.com eliminates siloed teams and supports Walmart’s strategy, said Carol Spieckerman, president of Spieckerman Retail. “Jet’s value to Walmart goes far beyond operating as a stand-alone e-commerce platform and arguably is more of a distraction from that perspective,” she said. “Through the acquisition, Walmart gained talent, process improvements and brand relationships that continue to positively impact its digital business.”
Acquisitions that supported Walmart’s digital brand portfolio expansion such as Bonobos and Modcloth “have wisely been kept whole,” Spieckerman said. “By contrast, Jet is a true platform play that will provide greater benefit once it’s fully assimilated into Walmart’s e-commerce operation. None of it precludes Walmart from leveraging the Jet.com brand to target urban markets nationwide.”
In fact, Lore said that while Jet.com’s focus has largely been on New York so far, he’s looking at other cities where Jet.com’s expertise and Walmart’s scale and operating model could be successful. In New York, Jet.com offers iconic local brands, and Apple and Nike, which aren’t sold on walmart.com. “More on that to come,” Lore said. “In specific large cities where Walmart has few or no stores, Jet has become hyper focused on urban customers.”
Since there’s a higher return on marketing investments with walmart.com, that’s where the company is consolidating its spending. While this has made Jet.com smaller from a sales perspective, it’s helped us create a smart portfolio approach where the businesses complement each other,” Lore said, “Jet continues to be a very valuable brand to us and it’s playing a specific role in helping Walmart reach urban customers.”