Jet.com's Final Ride

Walmart is a clear winner in Q1, announcing that e-commerce sales were up 74% due to grocery pickup and delivery. But it announced something else interesting: it is discontinuing Jet.com, which it acquired in 2016.

The retail giant delivered top-line and bottom-line earnings beats. While discretionary categories lagged, grocery was up low double digits and health and wellness was up high single digits (hurt by the closure of vision and auto care centers). Other than reporting increased revenue, Walmart indicated that it further consolidated operations and also said its US e-commerce operations helped curb losses elsewhere. It is an impressive achievement given the significant increase in COVID-19 related costs.

Which led to its announcement of discontinuing Jet.com as part of the consolidation effort. Walmart has been known in the industry as an aggressive acquirer that learns everything it can from the management team and the operations and then discontinues the acquired business all together to consolidate IPs under the Walmart brand. Modcloth had a similar story arc and many believe that Bonobos is not far behind.

Jet.com founder Marc Lore sits at the head of Walmart's U.S. e-commerce businesses. Mr. Lore has stock incentives to stay with the company through the fall of 2021. Instead of growing Jet.com, Walmart has focused on adding third-party sellers to Walmart.com, delivering online orders from stores, and adding online grocery service to many stores. During the quarter, Walmart started temporarily using 2,500 stores to ship out online orders, signaling its strategy to focus on stores rather than distribution centers. 
 

Challengers are coming for Amazon’s Go stores. In January 2018, Amazon rolled out Go stores, where a customer can scan his or her phone, walk-in, shop, and walk out with the items. So far, consumer response to Amazon Go has been largely positive, prompting Amazon reportedly to plan to open an additional 3,000 Amazon Go stores by 2021, including an expansion into airports and college campuses as well as heading overseas to London. If this vision is realized, Amazon Go could translate into a $4.5 billion sales opportunity.

Despite Amazon Go’s success, the autonomous stores still are not widely deployed, and others are working on similar solutions. Standard Cognition is one such startup that has been quietly working on perfecting the technology. Today it announced big plans for the future. As it prepares to scale in a world more amenable to skipping checkout, the San Francisco startup has acquired a competitor based in Italy called Checkout Technologies for an undisclosed sum.

Standard Cognition is eyeing international expansion. It has revealed plans to roll out its tech in Japan, where consumer habits revolve around visiting convenience stores. Stateside, the startup focuses on retrofitting existing stores, a service Amazon Go lacks. Standard Cognition has already landed a partnership with the Worcester Red Sox to showcase their tech in the baseball team’s new stadium.