Before Walmart Inc. acquired Jet.com Inc. the upstart retailer was burning through cash to acquire customers by offering a vast product catalog in order to compete with Amazon.com Inc. and Walmart. Post-acquisition with a lower marketing budget, Jet is taking a new route by refocusing its business on a specific customer target: urban, affluent consumers.
“We determined that Walmart had a strong presence from its store footprint and a brand that resonates in suburban and rural areas, while Jet had a stronger brand in urban areas,” said Simon Belsham, Jet’s president, on Thursday at Walmart’s shareholder meeting in Bentonville, Arkansas. “That led us to seek to rethink how we could do a complementary business, how we could build a business that we think can transform and reinvent e-commerce.”
As a result, Jet is now focused squarely on offering a tailored assortment of products in categories such as food, home, furniture and apparel that aim to appeal to its target consumers. “No one has successfully combined food and general merchandise sales online [that appeals to our audience],” said Belsham.”We think that’s the combination we can use to build a relationship with our customers that fosters brand love.”
In doing so, Jet aims to improve the experience it offers shoppers, said David Echegoyen, Jet’s chief customer officer. “Most of e-commerce has been focused around search,” he said. “The way e-commerce operates is so far removed from what we would have expected 20 years ago when shopping was a fun thing to do, not an activity focused around checking off a box. If we understand our mission and what drives us, we’ll show the shopper that we understand that buying groceries is different than shopping for fashion. There are areas where search is important. But there are others where search doesn’t work [for example,] if you don’t know what to wear to a party next week. We’re looking to build an infrastructure where we can serve shoppers that type of customer experience.”
Rethinking delivery is one part of that mindset shift. While Jet offers two-day shipping on “thousands” of items, speed is only important when consumers have control, Echegoyen said. “If fresh groceries arrive at your door, and you’re not there, that’s not a good experience,” he said. “It’s the same thing when it comes to home furnishings; if we try to deliver your couch a week early but your old couch is still there, an early delivery doesn’t help you.”
Focusing on service means giving consumers control over their deliveries, Belsham said. “Knowing when an item is going to come and giving consumers control around lifestyle is critical for the urban lifestyle,” he said. “We’ll offer fast delivery when you want it, but ensure that consumers also have control, which is really, really important.”
As Jet’s focus shifts, it aims to offer shoppers a Spotify-like experience. “Spotify gets better the more you use it,” Belsham said. “There isn’t really a retail experience that gets better the more you use it. There should be, and that’s what Jet wants to offer.”
Before it can do so, it needs to deal with declining traffic numbers. For instance, Jet’s website traffic declined about 60% in March compared with a year earlier, according to digital measurement firm SimilarWeb Ltd. Some of that decline stems from the smaller customer segment it is targeting, as well as a dip in its marketing spending. The retailer has been leveraging more direct response ads aimed at its target audiences rather than broad-based TV ads, Echegoyen said. However, the retailer plans to ramp up its marketing spending in the latter half of the year. “You’ll see more advertising coming this fall,” he said.
Walmart is No. 3 in the Internet Retailer 2018 Top 500. Amazon is No. 1.