Walmart’s gamble with Jet acquisition may not pay off.
While Jet.com launched last year touting “mind-blowing” discounts against Amazon (as promised in their television commercials), data from a new Boomerang study found that the startup is not really cheaper than Amazon after all. Business Insider, who commissioned the Boomerang Commerce study, reported that Jet was cheaper on just 16 percent of 331 best-seller items form Amazon that were also offered and in-stock on Jet.com. It also found that Jet’s list prices ran 16 percent higher than Amazon’s on average.
This data seems to conflict with earlier assessments by Boomerang, which found last fall that Jet beat Amazon’s prices on 73 percent of overlapping products. And that doesn’t include the discounts that kick in when you buy related items included in their proprietary basket building program. Jet founder Marc Lore told Recode that Jet prices are typically 5 percent lower than Amazon’s.
So, if the new data is correct, and Jet cannot undercut Amazon’s pricing, what will that mean for Walmart, who acquired the startup to propel its ecommerce and boost revenue?
The acquisition marks the departure from “third way” strategies, and could help the retail giant reproduce its offline dominance in the online world, as Innovative Retail Technologies reported. But that will only be true if Jet can successfully win over the online shopping crowd.
Jet is working hard to challenge Amazon, and Lore said that it could take at least five years to make the company profitable. They even dropped the membership fee in October in order to increase its customer base, but the company still struggled.
But Retail analyst Neil Saunders said that Jet’s model of encouraging bulk buying could help boost Walmart in areas that were previously lagging.
Brandon Young at Boomerang categorized Jet’s offerings more of a “flash sale” compared to Amazon’s “endless aisle,” though he also said that Jet’s selection and pricing could very well improve after the Walmart merger. He explained, “They’re now dealing in much bigger volumes. They may be able to leverage that to get much bigger deals.”
And Jet asserts that it is winning against Amazon in the important ways. In a company statement, Jet officials asserted, “For those items viewed on Jet, we are more frequently at parity with or below Amazon shipped and sold but the more important point is that our baskets cost less when people shop smarter using our proprietary system.”
