Canada Markets closed

How Walmart’s Jet.com plans to take on Amazon

Krystal Hu
Reporter

It’s sourcing premium products locally, offering same-day scheduled delivery and targeting affluent urban consumers. No, we’re not talking about Whole Foods. Walmart-owned Jet.com (WMT) is now doing all of that. 

Jet.com, which launched a redesign Thursday, introduced what it calls a “city grocery experience” to New York City residents, with plans to expand to more U.S. metro area later this year. The site offers a mix of household brands and its own private label products under its Uniquely J brand, as well as increasing selections from popular local and small businesses. For example, Jet has partnered with well-known New York-based brands such as  Bedford Cheese Shop, Orwashers Bakery, Big Gay Ice Cream and Just Bagels. Parcel, the New York-based delivery company acquired by Walmart in October 2017, will provide same-day and next day delivery of online orders.

Simon Belsham, president of Jet.com, sees the move into the grocery space as a necessary step to lure urban consumers and get them to stay on the e-commerce platform. “They buy food all the time, they buy fresh produce all the time,” Belsham told Yahoo Finance. “You can build trust, you can build frequency. It’s a great chance to build relationships with customers.”

The tricky grocery business

Grocery is known as a thin margin business, but people always need to buy food so it’s a steady and stable industry with opportunity for growth. Offering a good selection of offerings help increase the frequency of customers’ visits. The economics of grocery work is by scale, and there is an expectation that shoppers will purchase big-ticket items or more general merchandise while grocery shopping.

Assortments and services are the major selling point, according to Carmela Cugini, vice president of grocery, wholesale and international at Jet.com. She is working to establish partnerships with more local brands, like farmers’ market, and also to curate a personalized experience for shoppers. This comes at a time when local natural food brands find it hard to get on Whole Foods’ shelves as the grocery chain tries to centralize its buying decisions.  

Credit: Jet.com

Jet.com is also leveraging Walmart’s supply chain and knowledge about consumers. For now, customers need to order before 9 a.m. to get same-day delivery, but the Hoboken, N.J.-based company said the cutoff time will be later after it opens a fulfillment center in Bronx, N.Y. this fall.

Grocers are betting on more people ordering everything from eggs to beef online and wanting them delivered to their door. This year, 18.0 million U.S. adults will use a grocery app to order food at least once a month, a 49.6% jump from last year, according to eMarketer.

Amazon (AMZN), the powerful player that acquired Whole Foods for $13.7 billion last year, has been aggressively capturing market share by leveraging its delivery capacity. Earlier this week, Amazon expanded grocery delivery from Whole Foods to 10 more metro areas, making the one-hour-delivery service available in 38 cities across the U.S. Amazon offers grocery delivery through its Prime Now program. For Prime members, two-hour delivery is free on orders over $35 and one-hour delivery costs $7.99. Prime Now isn’t available to non-Prime members. In comparison, on Jet.com, same-day delivery costs $5.99 for shoppers in New York City and no subscription is needed.

Krystal Hu covers technology and economy for Yahoo Finance. Follow her on Twitter.

Read more:

Whole Foods to bring back employee stock option program after calls to unionize

Amazon bought Whole Foods a year ago. Here’s what has changed

Amazon and Whole Foods clash over products like Coca-Cola

Almost half of Amazon Prime members we surveyed say they’ll drop the service, but the company will be fine