Dive Brief:
- Walmart’s Jet.com will shutter its fresh grocery service in New York City that debuted just a year ago, Bloomberg reported. The service will notify shoppers of the closure Friday and will fulfill any remaining orders that have already been placed.
- Jet will close down its 200,000-square-foot grocery facility in the Bronx and eliminate between 200 and 300 jobs, according to Bloomberg. The company will continue to deliver non-perishable grocery products to New York City customers.
- Operational difficulties have plagued the service, Bloomberg said. It launched with prices that were lower than competitors but quickly had to raise them in order to cover high delivery costs. Executives left the company, and in recent month’s Jet has struggled to keep key grocery items like fresh produce in stock.
Dive Insight:
Jet always faced an uphill battle in trying to win over New York City customers loyal to Trader Joe’s, Whole Foods, FreshDirect and a slew of local and specialty grocers.
But the company had a plan: Compete on price and differentiate with unique and exclusive products like Orwasher’s bread and Blue Apron meal kits. It forged progressive partnerships with the likes of Fulton Fish Market and H-Mart, the country’s largest Asian grocer.
That plan began to crumble from the very start, according to Bloomberg. Jet opened its Bronx fulfillment center before it was fully operational. It also had to abandon its low-price position, as it was losing around $20 per order, which made it less competitive. Its per-order delivery fee rose from $5.95 at launch to $9.99, Bloomberg said.
Jet has had a rocky leadership structure in recent years. In June, parent company Walmart announced plans to eliminate Jet president Simon Belsham’s role to consolidate operations. The year prior, then-president Liza Landsman left the company.
Belsham’s elimination was part of a larger corporate realignment that took place over the summer in which Walmart folded all Jet employees under its e-commerce department, while still keeping the Jet brand.
According to Reuters, in 2016 Jet projected $1 billion in revenue and, according to estimates from Kantar shared with vendors, the company’s sales decreased to $689 million in 2019. As the company has failed to hit revenue goals, Walmart has focused on growing its main e-commerce brand instead.
Walmart's e-commerce business continues to thrive, bolstered by its grocery offering. It has expanded grocery pickup to about 3,100 locations and now offers delivery from more than 1,400 stores, executives said on the retailer’s recent earnings call.
