Let’s be clear, in NO way, shape, or form is Jet.com a “rival” of Amazon… it’s like comparing a small market minor league baseball team to the NY Yankees. So let’s hope the media can drop the hyperbole when discussing this acquisition.
AND this is also NOT about the realization by online retailers that they need a brick and mortar presence, or a trend of “online commerce expansion to physical retail space.” This is all about Walmart not having a clue how to effectively compete with Amazon and hoping Jet.com can help (big mistake). AND Jet.com having absolutely no workable business model as they stand today (selling at a loss, over-investing in customer acquisition at a rate that isn’t sustainable, and dramatic lack of repeat customers) and making a quick sale taking advantage of traditional Retailers desperation to find a way to compete with Amazon. So Walmart is over paying for “very little” by leaps and bounds.
Congrats/kudos to Marc Lore for leveraging his sale of Diapers.com (and reputation from building that great business) into a quick turn with not much more than smoke and mirrors (and the raising of lots of cash/effectuating a great sale for him… with not much more than a good “story”)… at the expense of Walmart shareholders. In reality the brand promise (and only benefit they offer, one which is unsustainable) of selling shit cheaper than anyone else is simply a race to the bottom.
Now Walmart will have three prongs to weave together instead of the two they have had since he inception of Walmart.com… and clearly cannot handle. Looking forward to watching from the sidelines as Amazon continues to crush Walmart’s latest ill conceived effort to compete.
And this post appearing Saturday in Business Insider totally missed the mark…
Everyone is underestimating Walmart’s ability to crush Amazon
At one time, many years ago, perhaps, but now… highly unlikely especially if they think Jet.com is the solution.
I asked my business partner John Andrews for some expert retail thought-leader input… “I’ve been frankly amazed at the lack of real business analysis on this subject thus far. This is a distraction that Walmart doesn’t need at the moment as it won’t help build any brand credibility for its ecom business and will increase operating costs without solving its #1 ecom problem: it just simply isn’t as easy and simple to use Walmart.com as it is Amazon, period! ecom is about friction free shopping. Make it so Walmart!!”
Also via John… “I’m not sure I agree with any point of the Business Insider article:
1. Walmart will win because it has a massive customer base – This has been true since the beginning of eCommerce and it hasn’t converted that to customer leadership. Walmart’s ecom revenue represents less than 3% of its total sales. How is it going to magically convert new folks. And the graph makes no sense, Jet.com of course has faster growth, it has a tiny base and is over-investing in customer acquisition at a rate that isn’t sustainable.
2. Walmart stores will be a distribution advantage – While Walmart’s stores should be an advantage, they aren’t. Ecom is a separate inventory which the writer pointed out in an article last fall… https://www.businessinsider.com/wal-marts-in-store-pickup-is-surprisingly-inconvenient-2015-9. The retailer price matches other sellers, but doesn’t match Walmart.com which kills a simple omni-channel expectation by consumers.
3. Jet.com can solve Walmart’s logistics issues – Jet doesn’t have any proprietary logistics that is better than Walmart’s current or in development technology (consider the investment size of Walmart’s current ecom). The value of Prime is so much more than free shipping, and unlike Jet.com’s membership which it had to drop… people happily pay for prime.”
#RetailRelevancy
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