Retail giant Walmart Inc. is discontinuing online grocery store Jet.com, which was bought in 2016 for $3.3 billion, citing continued strength of the Walmart.com brand.
In its first-quarter earnings statement, the company noted that the acquisition of Jet.com nearly four years ago was critical to accelerating its omni strategy.
Walmart had acquired the Hoboken, New Jersey-based online-only grocery startup as part of its efforts to challenge Amazon’s dominance in the e-commerce market. However, the move was highly criticized then as Jet.com was an unprofitable e-commerce site. As per reports, Walmart was actually trying to grab Marc Lore, who found Jet.com in 2014, in to its e-commerce business. Lore earlier had sold his online diaper business to Amazon.
Lore is now the head of Walmart’s U.S. e-commerce business. In its first quarter, Walmart U.S. eCommerce sales grew 74 percent with strong results for grocery pickup and delivery services, walmart.com and marketplace as customers opted for online shopping amid Covid-19 related lockdowns. Sam’s Club eCommerce sales grew 40 percent. In comparison, Walmart U.S. comp sales increased only 10 percent.
Meanwhile, a December report in the Wall Street Journal estimated that losses in e-commerce operations were around $2 billion for fiscal 2019. This was double the previously estimated $1 billion loss for 2019, as per a report by Vox in July. Walmart’s e-commerce efforts reportedly were generating internal strains after it bought Jet.com.
Following its acquisition, Walmart had repositioned the Jet site, with focus on specific large cities where Walmart has few or no stores, including New York. Walmart, which is still far behind Amazon, later integrated the big-box retailer fully into its e-commerce business.
In November last year, Jet.com had announced its decision to discontinue fresh grocery delivery service in New York City. The company was then focusing on selling dry goods and other general merchandise.
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