Do you remember the moment you first visited Jet.com? Perhaps it was when you learned prices drop as you shop. Or when you discovered they offer two-day shipping like those other guys. Or better yet, when you heard Walmart plans to dish out over $3 billion to buy it. Despite Jet.com’s formidable growth, many were taken aback by the sizable deal. However, when viewed through a software and customer experience lens, the Jet.com Walmart marriage makes good business sense.
Recently, EnterWorks CEO Rick Chavie had the opportunity to weigh in on the Jet.com Walmart acquisition, touching on why it works and what to watch for.
Acquiring Niche Technologies
Firstly, the Jet.com Walmart deal is one of many attempts to compete with the behemoth, Amazon. It also finds a “third way” that seeks to embed a software firm within a traditional retailer by acquiring niche web technologies in social, analytics, and web infrastructure, said Chavie in a recent article by Multichannel Merchant.
“What is unique about this acquisition is the departure from that third way strategy in buying a full-on ecommerce retailer that has shown the industry how to ramp up a customer base rapidly,” Chavie said. “Such a potential acquisition is not surprising given Walmart CEO’s admission of disappointment in the ongoing decline in their ecommerce growth rate after Amazon posted 32% growth in the first quarter.”
Seamless Customer Experience Across Touchpoints
Secondly, we know customer experience is important to Jet, and an area from which Walmart can glean. Ben Babcock, director of research for Jet.com, said in a Forbes.com interview, “We strive to build customer experiences that are beautiful, engaging, and deliver on our core value proposition. Our customer experience is not solely the website, it is the Jet brand discovery experience…the website shopping experience, the delivery experience, and our high quality customer service experience. The customer experience spans each of these touch points and must be seamless, consistent, and delightful from end to end.”
The Jet.com Walmart acquisition will likely boost Walmart’s efforts to deliver a differentiated customer experience across channels. Thereby helping Walmart become more of a mobile and online browsing destination, much like Amazon currently is. Hence, it’s an opportunity to raise Walmart’s digital sales and supplement its strong brick-and-mortar presence.
In a recent Mobile Commerce Daily article, Chavie shared his views on the omnichannel potential the deal brings.
According to Chavie, “With acquisitions and acqui-hires such as Kosmix, Luvocracy, One Riot, Social Calendar and Small Society, Walmart can enrich the straightforward but easy-to-use mobile offerings of Jet.com. What Jet.com brings is its demonstrated ability to get people to try its platform, and not just for everyday buying. There is also a bit of a treasure hunt aspect for prospects that is missing at Walmart.
“Walmart can learn a lot about customer engagement by having information outside of its current universe of online shoppers. While it is fully capable of analyzing the market as well as anyone, with its big data and personalization assets such as Kosmix, it will have access to a set of customers that extends beyond its current base. This opens up a rich opportunity for testing and learning.”
Unleashing Supply Chain Potential
Thirdly, many have noted that Jet.com’s supply chain model may provide pointers for Walmart on speeding up fulfillment and shipping. Particularly in light of Amazon’s expansion of one-hour delivery services. However, Chavie points out in an article by Mobile Commerce Daily that there’s a bigger play at hand.
“If Walmart can leverage the insights from Jet.com, it may be able to apply those learnings to its current business; however, the bigger play will be applying the supply chain expertise and assets that Walmart possesses to unleash the potential of Jet.com experiences to accelerate its growth,” Chavie surmised.
Give and Take
Lastly, it appears the Jet.com Walmart marriage will require give and take from both companies.
Jet’s growth has been a force to reckon with. However, the company has struggled to obtain loyal repeat customers. This is an area where Walmart can lend a hand. According to Slice Intelligence, Walmart and Jet.com shoppers, on average, seem to spend roughly the same per order ($75). Walmart shoppers, however, ordered an average of 2.6 times over the last year, whereas Jet’s only ordered 1.7 times.
Jet.com will also benefit from Walmart in terms of retail expertise, supply chain expertise, purchasing scale, sourcing capabilities and distribution footprint.
Meanwhile, according to a Walmart press release, the acquisition will build on the foundation in place to serve customers across the Walmart app, site and stores. Furthermore, it will position the company for even faster e-commerce growth in the future by expanding customer reach and adding new capabilities. It will also infuse Walmart with fresh ideas and expertise, as well as an attractive brand with proven appeal. This is especially true among Millennials, the first generation of true digital natives. Jet.com has growing customer base of urban and millennial customers. More than 400,000 new shoppers added monthly and an average of 25,000 daily processed orders.
Together, Walmart and Jet.com can leverage innovative technology solutions from both companies to develop new offerings. But, as Chavie points out in RIS News, there is a caveat.
“Achieving growth in e-commerce has always turned on the proposition that an online retailer gets in tune with customer preferences,” said Chavie. “There is no question the traditional Wal-Mart has a lot to offer. In terms of price, assortment and geographic saturation throughout the U.S. And, while its e-commerce has achieved some significant scale, it is not enough. Buying a company that has demonstrated how to accomplish outsized growth may be the answer. However, it will take discipline not to grind it down to fit the Wal-Mart way.”
As a leader in PIM software solutions that streamline the customer experience, EnterWorks will keep a close eye on how the Jet.com Walmart acquisition affects the companies and industry at large.