Nearly four years after it acquired the company for $3 billion, Walmart is shutting down Jet.com. The retailer quietly announced the move, which was spotted by TechCrunch, in its first-quarter 2020 earnings report. Walmart bought the online-only marketplace, then just over a year old, in 2016. At the time, most people thought Jet would figure prominently in Walmart's attempts to compete against Amazon. That hasn't been the case.
Instead, Walmart has tried to counter Amazon's online dominance by building out online services that are an extension of its brick-and-mortar stores. For example, the company recently said it would expand its two-hour Express Delivery service to nearly 2,000 stores across the US through the end of May. In February, a Recode report said Walmart was also preparing to trial an Amazon Prime-like subscription service.
As you might imagine, the company tried to put a positive spin on the news. "Due to [the] continued strength of the Walmart.com brand, the company will discontinue Jet.com," Walmart said in a statement to TechCrunch. "The acquisition of Jet.com nearly four years ago was critical to accelerating our omni strategy."
Nonetheless, the timing of Walmart's decision may seem unintuitive. As part of its Q1 earnings, Walmart said online sales increased by 74 percent year-over-year, thanks in part to a surge of people shopping online due to the coronavirus pandemic. But Walmart was likely looking at the bigger picture. According to a 2019 Wall Street Journal report, the company's online division lost approximately $2 billion in one fiscal year. With just how much uncertainty the coronavirus pandemic has created in the economy, it's hard to tell whether people will have the money to shop online as much as they've done in recent weeks.