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Walmart Inc. will merge all employees of its subsidiary Jet.com into its main operations over the summer as it retools the e-commerce platform to expand into more cities, the Bentonville retailer said in a news release.

Marc Lore, president and chief executive officer of Walmart E-commerce U.S. and the founder of Jet, described the coming changes in the release issued late Wednesday. Walmart acquired the company based in Hoboken, N.J., for $3.3 billion in 2016. Jet has since served customers in the New York City area, where few Walmart stores are located.

"Jet continues to be a very valuable brand to us, and it is playing a specific role in helping Walmart reach urban customers," Lore said. "The focus has largely been on New York so far, and we're looking at other cities where we might bring together Jet's expertise and the scale and operating model of Walmart."

As part of the realignment, Jet President Simon Belsham will step down after helping with the transition through early August, Lore said. "With the teams creating synergy and Jet becoming even more focused, we don't have the same need for a dedicated leader," he said. However, Lore said Belsham played a critical role in repositioning Jet.com last year to reach urban customers.

Jet's management and strategy will fall to Kieran Shanahan, who will continue to oversee the food, consumables and health and wellness categories for Walmart e-commerce, Lore said. For the past year, Jet has sought to expand same-day and next-day delivery of groceries and general merchandise in the Big Apple.

Many of Jet's teams were merged with Walmart's after its acquisition, Lore said, including supply chain and retail. Remaining Jet teams still to be integrated with their Walmart counterparts include marketing, technology, analytics and product.

A Jet spokesman said Thursday that, besides Lore, Jet co-founders Nate Faust and Mike Hanrahan joined Walmart as part of the acquisition, along with many Jet employees. All that talent and experience helped make possible such innovations as two-day and next-day free shipping and the new in-home grocery delivery service, the spokesman said.

Hanrahan now heads Walmart's Intelligent Retail Lab, which tests artificial intelligence-enabled technologies inside a fully operating grocery store in Levittown, N.Y. Faust oversees supply chain and logistics for the retailer's U.S. e-commerce operations.

The spokesman clarified that Jet will continue to operate as a Walmart subsidiary. "We are the urban brand for Walmart focused on serving city customers," the spokesman said. No jobs will be cut, but rather "realigned" to Walmart, and Jet will continue to operate out of Hoboken.

Keith Anderson, senior vice president of strategy and insight for e-commerce analytics firm Profitero, said Thursday that the move validated rumors that have circulated for at least a year. He said a few Profitero clients in manufacturing mentioned earlier this year that Jet wasn't replenishing its stock or buying new items. Also, "Walmart has almost never supported or scaled brands/banners it has acquired in the U.S.," he said, adding that international acquisitions were "a different story."

Anderson said that while some argue that Walmart acquired Jet to draw younger, more affluent urban shoppers, "I think Walmart was really buying Marc Lore's vision, strategy, team and tech -- not Jet as a stand-alone brand or operation -- and I think Marc understood and accepted that."

"Walmart didn't buy Jet for what Jet was or would become as its own entity," Anderson said. "It bought it for what that leader and team could do for Walmart. For Jet to continue to grow exponentially post-acquisition would have required an investment and operating model that isn't compatible with Walmart's."

Business on 06/14/2019

Print Headline: Walmart to absorb Jet.com employees; job cuts not expected

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