Fourteen months after introducing same-day grocery delivery in New York, Walmart has shut down delivery of fresh grocery items through Jet.com as the operation had stumbled badly, according to Bloomberg, including price increases to offset an estimated $20 loss per delivery.
New York and other large urban markets have become a battleground for e-grocery services, with fierce competition among Walmart, Amazon and other major players like Peapod, Instacart and Fresh Direct.
The Jet.com service was launched amid much fanfare in September 2018, with Jet opening a 200,000-square-foot fulfillment center in the Bronx, and used acquired unit Parcel to handle deliveries. The company expressing high hopes of spreading the service to other markets after it took off in New York.
But troubles started early, according to Bloomberg, including the fulfillment center not being ready to go at launch, and issues with inventory shortfalls.
“We learned a lot by testing Jet fresh grocery delivery in New York City, and we recognized the important role our stores play in providing an efficient way to offer groceries to customers through pickup and delivery,” a Walmart spokesperson told CNBC. About 200 to 300 Jet employees were let go as a result of the shutdown, mostly drivers and warehouse workers, according to Bloomberg.
The spokesperson added Walmart will continue to focus on grocery delivery and pickup in other markets, and Jet will still offer “… millions of dry grocery and general merchandise items to customers in major metros like New York City.”
Jet overall appears to be winding down, as evidenced by Walmart folding Jet into its ecommerce operations this past summer. Jet was acquired by Walmart for $3.3 billion in 2016, and founder Marc Lore became head of Walmart ecommerce in the U.S.
E-grocery sales overall continue to be strong for Walmart, which cited them as a primary driver of a 41% gain in ecommerce sales during Q3.