Business

Jet is going where Walmart can't

Posted November 2, 2018 8:19 a.m. EDT

— Walmart bought Jet.com two years ago to draw younger and wealthier shoppers in big cities. Now, Walmart is positioning Jet as a home for the premium brands it could never offer.

Over the past week, Blue Apron, Nike, and Bonobos all began selling on Jet. Walmart acquired Bonobos last year, but it doesn't directly sell the trendy men's clothing brand at supercenters or on its flagship website to preserve Bonobos' status.

Walmart (WMT) has built its reputation as the discount mega store for low-and-middle income America. But that image has made it difficult to attract higher-end brands like Nike, a company that wants complete control over prices and how many sneakers are offered on shelves.

In an example of the baggage the Walmart name still carries, premium camping and outdoor gear makers revolted in September when Walmart tried to set up a curated outdoor page on its redesigned Walmart.com.

But Jet offers Walmart a safe space for image-conscious brands to park their stuff. Blue Apron, Nike, and Bonobos get to expand their potential market on Jet while keeping Walmart at a distance.

"We're definitely attracting much more premium brands on this site," Walmart head of US e-commerce and Jet founder Marc Lore said during the company's annual investor day in October. Lore believes Jet will help convince brands to transition over to Walmart.com in the future.

Jet has upgraded its website, added speedy grocery delivery options, and partnered with local brands to reach urban shoppers.

Blue Apron is starting off slow on Jet, offering four different meal kits. Nike and Bonobos will both have custom shops on the site.

Analysts expect new top clothing labels to follow Nike and Bonobos' lead. Rival meal kit companies might take a cue from Blue Apron, too.

"You're going to see more higher end brands reaching out directly to Walmart about potentially selling on Jet once they realize the potential," said Matt Lindner, senior e-commerce analyst at market research firm Mintel.