Walmart Building On Jet.com Purchase

The game plan for recently acquired Jet.com is to target Millennials, provide a unique brand proposition and build on distribution advantages inherent and newly available to the e-commerce division, executives proposed at the Walmart annual analyst meeting.

Appearing with Walmart Stores CEO Doug McMillon, Marc Lore, president and CEO, Walmart e-commerce, and a founder of Jet.com, said that, as online retailers have developed, new opportunities have emerged. Jet.com built off those advantages, using technology to pair purchasers and distribution efficiencies, offering consumers savings in response to decisions that lower logistical costs. At the same time, Jet.com targeted younger consumers who are style-conscious and favor purchases that might not be readily available via major mass market websites.

“Jet is really going to focus on the urban Millennial customer and really go after more of the premium-type brands that don’t typically want to sell on marketplaces,” Lore told analysts. “So I think it’s a nice complementary set of brands that we have.”

Lore noted that Jet.com and Walmart could become even more effective in distribution terms given their pairing.

“I look around and see the vast assets that are at our disposal here,” he said. “The foundation has been laid in terms of the warehouse network. I think the decision to build five mega centers was the right one. There’s incredible automation there, and they’re just starting to come up online, and so it’s sort of like the perfect time to really accelerate the business.”

Lore added, “The sourcing capabilities relative to what we experience is not even close. The amazing products that you see up here, both Sam’s Club and Walmart, and the ability to access that is super exciting. Bringing together both marketplaces, there’s 20 million products on walmart.com. There’s 15 million on Jet. We have two separate teams, bringing those catalogs together so both companies benefit. Leveraging the store capabilities with in-store pickup, I think, is a huge advantage because it avoids last-mile delivery costs, about 70% to 80% of total delivery cost. So if you’re able to fulfill products in an e-commerce warehouse, and you have enough volume to line haul products directly to the store, your cost to ship is $1 a package. It’s an incredibly powerful asset.”