Walmart winds down Jet.com, four years after $3.3 billion acquisition of e-commerce company

Four years ago, Walmart made a pricey bet on its e-commerce future. It paid $3.3 billion to buy Jet.com, an e-commerce startup that it hoped would attract younger, affluent and city-dwelling customers and help it fend off Amazon's rapid rise.

On Tuesday, Walmart announced it will discontinue Jet.com and phase out the brand. Walmart is shutting down Jet.com, the online shopping site as part of its attempts to better compete with rival Amazon online, an area that Amazon excels at compared to Walmart, as per the reports.

Walmart CEO Doug McMillon said the company gained more than a name. On a call with analysts, he credited the acquisition for "jump-starting the progress we have made the last few years." He pointed to Walmart's curbside pickup, delivery to the home and expansion of categories beyond groceries, such as apparel and home decor.

"While the brand name may still be used in the future, our resources, people and financials have been dominated by the Walmart brand because it has so much traction," he said. "We're seeing the Walmart brand resonate regardless of income, geography or age.

Jet.com's founder, Marc Lore, leads Walmart's e-commerce business in the U.S.

According to Walmart’s Q1 earnings release, the decision to shut down Jet.com is due to the “continued strength of the Walmart.com brand,” with the company citing the Jet acquisition in 2016 as “critical to accelerating our omni strategy.”

But the numbers tell a different story: last year, Walmart lost about $2 billion on its online e-commerce operations, according to a report.

The company has since seen a big boost in online spending. Walmart’s e-commerce business is up 74 percent compared to Q1 2019, with the company citing increased demand for grocery pickup and delivery services due to the COVID-19 pandemic.

McMillon said Walmart doesn't "anticipate a significant accounting charge due to this decision." He said most employees had been moved to roles tied to the Walmart brand.