Walmart becomes a pandemic lifeline, online sales surge 74%

Darnell Taylor
May 22, 2020

While Jet did help Walmart grow in the e-commerce space, its own website started seeing downward traffic. In the earnings release, Walmart commended Jet for being "critical to accelerating our omni strategy".

"Due to continued strength of the Walmart.com brand, the company will discontinue Jet.com", Walmart noted in its first quarter of its fiscal year 2021 earnings report on Tuesday.

Then in June of past year, Walmart announced plans to absorb Jet staff into its operations .

"Walmart ending the Jet.com experiment isn't a surprise", said retail consultant and former Amazon executive Brittain Ladd.

After acquiring Jet, Walmart named Jet cofounder Marc Lore as the head of its U.S. e-commerce business. But chains such as Walmart and Home Depot have reaped the benefits of being deemed "essential businesses". It rolled out an emergency leave policy and spent money on shields at checkout lines, as well as new signage to control the flow of customers in stores.

"Having a wide range of fulfillment options, including delivery to home, collection from store - and by using stores for fulfillment - allowed Walmart to ramp up capacity in a way that many other players struggled to do", said Neil Saunders, managing director at GlobalData Retail. Pier 1 Imports, Inc., which filed for Chapter 11 in February, said Tuesday that it's winding down its business after stores are able to reopen and it can conduct liquidation sales.

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Walmart sales surged in the first quarter amid unprecedented demand for grocery staples and cleaning supplies from consumers panicked by the coronavirus pandemic. Weinswig said Jet.com's legacy appears to have been to jump-start Walmart.com.

The retailer says it hired a whopping 235,000 new workers in the first three months of the year, to keep up with big demand at stores and warehouses.

"Jet.com definitely gave Walmart a "runway" into new capabilities and digital talent so it's disappearance as a separate platform shouldn't be seen as a fail".

Consolidated gross profit rate declined 66 basis points, reflecting in part a shift in the sales mix to lower-margin categories and the lower-margin e-commerce channel.

As I wrote at the time for Fortune: "Jet will use a membership-based, real-time trading platform to provide deeper discounts than are now available online, and steer users toward a "smart cart" experience rather than impulse buys". Crafts and fabric, in particular, saw sales growth. There is no playbook for what Walmart is trying to do today, but its online grocery business has been huge during this pandemic.

Benedict said Lore's future with Walmart will likely depend if entrepreneurial opportunities continue to exist for him within Walmart. "Only he knows for sure", Benedict said.

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