How Walmart is Using Jet to Propel Its Ecommerce Strategy
Walmart has somewhat lagged behind some of its competitors when it comes to ecommerce, relying instead on its network of physical stores to remain relevant. However, with its recent acquisition of ecommerce platform Jet, the company is changing things up.
Walmart's story begins in 1945 when a former JC Penney employee named Sam Walton struck out by himself with a purchase of his own convenience store. The business was built on the principle of selling products at a low price, compensating for the low profit margin with high volume sales. The strategy worked, and the company was generating a quarter of a million dollars in revenue by its fifth year. The first store to bear the Walmart name was opened in 1962 in Rogers, Arkansas.
Today, Walmart is the largest company in the world and employs over 2 million people. The company has revenues of $485,873 and holds the #1 spot on the Fortune 500.
Jet's Ecommerce Platform
Walmart acquired struggling grocery ecommerce platform Jet late in 2016 for $3.3 billion. Jet was built on a principle of offering price incentives to drive further purchases. For example, if a customer puts flour in their basket, Jet's AI may recommend eggs and milk at a discounted price to complement it.
Following the acquisition, Walmart is using Jet's ecommerce expertise to drive its own digital innovations. While Jet was hemorrhaging money on the business side, its technology and digital knowhow was sound, and Walmart considered this factor to be where the value in this acquisition truly lay - especially when it came to facilitating Walmart's grocery ecommerce platform.
"Walmart committed to preserving everything that worked at Jet pre-acquisition and simply let Jet be Jet," said Jet President, Liza Landsman. "Walmart CEO Doug McMillon said: 'What do we do to make sure we don't hug you too tight? How do we make sure we don't slow you down in any way?' And with every opportunity it gets, Walmart steps out of Jet's way and continues to embrace Jet's culture of innovation. For the most part, Jet post-acquisition is the same as it was before."
A New Source of Innovation
Walmart has already incorporated a great many of Jet's ecommerce innovations into its own digital operations.
Over the last year, Walmart has offered free two-day shipping on products without requiring a pre-paid membership. A variation on Jet's "smart-cart" technology allows for greater ecommerce pricing transparency. Walmart also offers discounts to customers who choose to collect their products in-store rather than selecting home delivery, and an expanded suite of delivery options - including associate facilitated delivery, which aims to save consumers time and money.
"Earlier this year, we announced 'associate delivery' at Walmart (store associates on their way home delivering products to customers), something Jet was exploring pre-acquisition," said Landsman. "Since Walmart stores are within 10 miles of 90% of the U.S. population, leveraging associates to deliver packages enables consumers to get packages faster and cheaper, while empowering associates to earn more money. Jet's also touching Walmart's ecommerce business. For example, Walmart now charges customers less if they pick up certain items in-store versus having them delivered."
Walmart is also building on the integration between the various arms of the business by having cross-training programs. This allows for Walmart teams to learn directly from the technology expertise of Jet's people, and Jet's employees to leverage Walmart's scale and merchandising experience. For example, when Jet launched its new private brand, named Uniquely J, they were able to access Walmart's vast supplier network to increase the options available for the new business endeavor.
Walmart's buying power has always given it an advantage over its brick and mortar competitors, and now it's using that same power, via intelligent acquisitions, to give a boost to its ecommerce platform.
The final word goes to Jet President, Liza Landsman.
"It's not easy to both empower a startup to retain its startup-ness while effectively leveraging its leadership and best practices to transform the newly joined company. Yet, somehow, Walmart has done it. Now that it's over the momentous make-or-break post-acquisition hump, it seems as if Walmart will continue to innovate and give Amazon a run for their money."
You can hear Walmart/Jet's General Manager of Grocery and Wholesale for US Ecommerce, Carmela Cugini, speak at Digital Food & Beverage 2018 this July in Chicago, IL.
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