In the world of e-commerce, few companies have generated as much buzz and excitement as Jet.com. Founded in 2014 by Marc Lore, the creator of Diapers.com, Jet.com promised to revolutionize online shopping with its innovative pricing model, customer-centric approach, and partnerships with luxury brands. For picky shoppers always on the hunt for the best deals and the most seamless experience, Jet.com seemed like a dream come true.
However, just six years later, the once-promising company would find itself shuttered, leaving many to wonder what went wrong. As a retail and consumer expert and a self-proclaimed picky shopper, I‘ve been fascinated by the story of Jet.com and what it reveals about the challenges and opportunities in the e-commerce space.
The Appeal of Jet.com
When Jet.com first launched, it quickly gained a reputation as a haven for picky shoppers. One of the company‘s key innovations was its real-time pricing algorithm, which adjusted prices based on factors such as the user‘s location, payment method, and the number of items in their cart. This meant that savvy shoppers could unlock even bigger discounts by strategically filling their carts and choosing the most cost-effective payment and shipping options.
For example, if a shopper added multiple items from the same distribution center to their cart, Jet.com‘s algorithm would automatically apply a bulk discount and reduce the shipping costs. Similarly, if the shopper chose to pay with a debit card instead of a credit card, they would receive an additional discount to offset the lower transaction fees.
These features were a game-changer for picky shoppers who were used to spending hours scouring the internet for the best deals. With Jet.com, they could simply log on, fill their cart, and watch the prices drop in real-time.
Another appealing aspect of Jet.com was its partnerships with luxury brands like Bloomingdale‘s, Nike, and Bonobos. These collaborations gave the site a more upscale image and attracted a younger, more affluent customer base that was willing to pay a premium for quality and convenience.
Through the Jet Anywhere program, shoppers could earn Jet Cash by making purchases at partner websites, which could then be used for future purchases on Jet.com. This loyalty program was a smart way to encourage repeat business and create a sense of exclusivity around the Jet.com brand.
In its first year of operation, Jet.com generated an impressive $1 billion in gross merchandise value (GMV) and attracted more than 4 million registered users. By 2016, the company had raised over $500 million in funding and was valued at $1.5 billion.
| Year | GMV (billions) | Registered Users (millions) |
|---|---|---|
| 2015 | $1.0 | 4.0 |
| 2016 | $1.3 | 6.0 |
Despite this rapid growth, Jet.com still faced an uphill battle in competing with Amazon, which controlled nearly 40% of the U.S. e-commerce market. In 2016, Walmart made a bold move to acquire Jet.com for $3.3 billion, with the goal of leveraging the company‘s technology and talent to bolster its own e-commerce capabilities.
At the time of the acquisition, Walmart‘s e-commerce sales were growing at a rate of just 7%, compared to Amazon‘s 28%. By bringing Jet.com into the fold, Walmart hoped to accelerate its online growth and gain a foothold in the lucrative urban millennial market.
The Challenges of Competing with Amazon
Despite the initial optimism surrounding the Walmart acquisition, Jet.com soon found itself struggling to keep up with Amazon‘s relentless pace of innovation and expansion. In 2018, Amazon captured nearly 50% of the U.S. e-commerce market, while Walmart‘s share remained stuck at around 4%.
| Company | U.S. E-commerce Market Share (2018) |
|---|---|
| Amazon | 49.1% |
| eBay | 6.6% |
| Apple | 3.9% |
| Walmart | 3.7% |
One of the biggest challenges for Jet.com was competing with Amazon Prime, which offered free two-day shipping, exclusive discounts, and access to a wide range of digital content for an annual fee. By 2019, more than 100 million Americans were Prime members, making it difficult for Jet.com to attract and retain customers.
Moreover, Amazon was rapidly expanding its own grocery delivery service, Amazon Fresh, which put pressure on Jet.com‘s core business. According to a report by Brick Meets Click, online grocery sales in the U.S. grew by 22% in 2019, reaching $28.7 billion. Amazon captured a significant portion of this growth, thanks to its acquisition of Whole Foods and its aggressive expansion of Amazon Fresh.
The Decision to Shut Down Jet.com
In May 2020, Walmart announced that it would be shutting down Jet.com, just four years after acquiring it for $3.3 billion. The decision was driven by several factors, including the site‘s continued unprofitability and Walmart‘s desire to focus on its own e-commerce brand.
According to Walmart CEO Doug McMillon, the acquisition of Jet.com had been "critical to accelerating our omni strategy" but the company had "learned a lot and built even more capabilities that can help shape how we serve customers now and into the future."
For picky shoppers who had come to rely on Jet.com for its unique pricing model and curated selection of products, the news was disappointing but not entirely surprising. Many had noticed that Jet.com‘s prices had become less competitive over time and that the site‘s selection had become more limited as Walmart focused on integrating Jet.com‘s technology and talent into its own e-commerce operations.
The Future of E-Commerce and Online Grocery Shopping
The rise and fall of Jet.com offers valuable lessons for retailers and consumers alike. On the one hand, it underscores the immense challenge of competing with Amazon, which has an unparalleled advantage in terms of scale, resources, and customer loyalty. As Sucharita Kodali, a retail analyst at Forrester, put it: "Jet.com was a victim of Amazon‘s success. It‘s very hard to compete with a company that has such a dominant position in the market."
On the other hand, the story of Jet.com also highlights the importance of innovation and adaptability in the rapidly evolving e-commerce landscape. While Jet.com‘s pricing model and partnerships with luxury brands were initially promising, they were not enough to sustain long-term growth in the face of Amazon‘s relentless competition.
Looking ahead, it‘s clear that the future of e-commerce and online grocery shopping will be shaped by a combination of technological innovation, customer-centric strategies, and strategic partnerships. As more consumers shift their spending online, retailers will need to find new ways to differentiate themselves and create value for their customers.
For picky shoppers, this means being savvy about the tools and resources available to them, from price comparison apps to loyalty programs to subscription services. It also means being willing to explore new options and adapt to changing market conditions, whether that means trying out a new online grocery service or experimenting with a different payment method to unlock additional discounts.
Conclusion
The rise and fall of Jet.com is a cautionary tale for retailers and consumers alike, highlighting both the immense potential and the significant challenges of competing in the e-commerce space. While Jet.com‘s innovative pricing model and partnerships with luxury brands initially set it apart, ultimately it was not enough to overcome the dominance of Amazon.
For picky shoppers, the lesson is clear: while it‘s important to be discerning and strategic about where and how you shop online, it‘s also essential to be adaptable and open to new possibilities. As the e-commerce landscape continues to evolve, the most successful shoppers will be those who are able to navigate the changing tides and find new ways to unlock value and convenience.
As for the future of Jet.com, it remains to be seen how its technology and talent will be integrated into Walmart‘s broader e-commerce strategy. However, one thing is certain: the story of Jet.com will continue to be studied and analyzed by retail experts and consumers alike, as a case study in the challenges and opportunities of competing in the digital age.
