Jet.com is an online retailer that offers lower prices on grocery products. However, several people wonder about whether or not Walmart owns the company. And, if so, is Jet.com still profitable?
I’ve been curious about the same thing! So, I decided to look into the matter further. That said, here’s everything I discovered about Jet.com and Walmart’s relationship and more!
What Was Jet.com?
Founded by Diapers.com creator Marc Lore, Jet.com was a promising e-Commerce site rivaling Amazon Fresh before Walmart purchased the website to expand its e-Commerce department, compete with Amazon, and reach younger, more affluent shoppers. However, the partnership had dissolved within three years, and the website closed for good in 2020.
Keep reading to find out what Jet.com is and if Walmart’s purchase of the company was a hit or miss!
What Was Jet.com?
Founded by Diapers.com founder Marc Lore, Jet.com was once an American e-Commerce company specializing in selling groceries online.
That said, it had a platform that was like the Amazon Fresh Marketplace. Unlike Amazon, discounts were not tied to your premium membership.
Instead, as you add items to your virtual shopping cart, the app would offer you incentives to purchase more. Also, all options are clearly displayed during the checkout process.
Further, Jet.com incentives could be things like:
- Free shipping
- Lower prices for bulk items
- Free mail-in exchanges or returns
By encouraging customers to buy items in bulk, it makes the purchase less expensive overall for the company by reducing shipping costs, passing these savings on to customers!
How Did Does A Jet.com Membership Cost?
Initially, founders wanted to provide a 90-trial period where shoppers are given free access to test out the website. After that, they would pay an annual membership fee of $50.
However, that plan was scrapped early in the planning, and Jet.com didn’t charge a fee.
That said, this decision was one of the contributing reasons for the company’s early failures before Walmart intervened in 2016.
Why Did Walmart Purchase Jet.com?
Walmart became Jet.com’s biggest shareholder in October 2016 when it bought 30% of the company for $3 billion.
With that, Walmart’s shares were worth $3 billion in October 2016, but by June 2017, they were worth only $1 billion.
Unsurprisingly, Walmart purchased Jet.com to be more competitive with Amazon because it was afraid Amazon would expand too far into grocery and leave Walmart in the dust.
Since Jet.com is an online grocery hub, Walmart felt this was a way to grow like how Walmart had expanded into new markets in the past.
Additionally, Walmart purchased Jet.com because it wanted to revive the company, which was struggling financially when Walmart bought it.
Therefore, when Walmart purchased Jet.com to merge with its online grocery service, both could stay competitive with Amazon’s grocery business.
Another benefit for Walmart was that by purchasing Jet.com, it gained some amazingly talented workers.
For example, Marc Lore went on to be President and CEO of e-Commerce (US) from 2016 to 2021!
Also, the company expanded access to distribution and fulfillment centers which made it easier and faster to get products to customers.
Before the acquisition of Jet.com, Walmart was not known as a luxury or high-end retail brand.
On the other hand, Jet.com has partnerships with luxury retail stores like Bloomingdales, which raised how the public viewed Walmart.
Finally, Walmart shoppers are rural or suburban households with families. Urban dwellers tend to use delivery services more, so this expanded Walmart into that market, too.
What Features Did Jet.com Have That Made It Successful?
One feature that makes Jet.com successful is its “real-time pricing algorithm,” which delivers the most accurate prices to customers.
Additionally, item pricing is based on variables like location, payment type, and purchase from a partnering website.
For example, if a user buys a few items from the same distribution center, they’ll be cheaper than if they were from separate centers.
Likewise, if the shopper made their purchase with a debit card instead of a credit card with more expensive processing fees, they would receive a discount.
Finally, through the Jet Anywhere Program, shoppers could spend money at partnering locations and earn Jet Cash that they could use to purchase items on the website in the future.
On top of that, some of the partnering locations were:
- Ann Taylor
- Nike
- com
- Bloomingdales
Why Did Walmart End Its Relationship With Jet.com?
Shockingly, just as quickly as Walmart decided to purchase Jet.com, it terminated the relationship in around three years.
Simply put, Walmart ended its relationship with Jet.com because it wasn’t profitable for Walmart.
For example, Walmart had to pay $3 billion for a 30% stake in Jet.com, but by June 2017, that stake was worth only $1 billion.
Also, another reason for the discontinuation is that Walmart wanted to diversify and found more success with other e-commerce sites like Bonobos or Modcloth, which Walmart owns.
Likewise, Walmart found that Jet.com continued to have difficulty competing with Amazon for the online grocery business.
Additionally, after displaying links to other websites as if it was partnering sites, Jet found itself in hot water with some significant businesses.
Therefore, although Jet.com removed the links to businesses that requested removal, the damage to its image was already done.
Does Jet.com Still Exist, And What Company Owns It Now?
Although the website abruptly shut down without a heads up from Walmart in June of 2020, it still redirects you to the Walmart website if you type Jet.com into your search engine.
So, this means that Walmart still has ownership of the domain name as well as the company. However, it looks like Walmart’s finally decided it’s not going to reimagine the brand in any way.
What Happened To The Jet.com Employees When The Website And Warehouses Closed?
As of closing, there were approximately 5,000 Jet.com workers employed by Jet.com.
Fortunately, most workers were able to find other jobs within Walmart and were transferred to other sites.
However, Walmart decided it would cut ties with the president of Jet.com, Simon Belsham, and he was allowed to step down after Walmart acquired the company.
If you’re wondering what happened to Marc Lore, he was President and CEO of Walmart e-Commerce (US) from September 2016- January 2021!
To learn more, you can also see our related guides on how much Walmart makes per minute, the companies that are owned by Walmart, and the Walton family net worth.
Conclusion
Although Walmart’s investment in Jet.com is seen as a failure by some, others see it differently.
First, the investment paid off because Walmart was able to draw in talent that knew e-commerce well. Also, Walmart attracted a younger, more affluent shopping base.
Finally, the brand image increased because Walmart became associated with several high-end clothing brands through Jet.com’s partnerships.
