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Daily news and analysis about the food tech revolution

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Walmart’s Jet.com Shuttering Fresh Food Delivery in NYC

Jet.com, which is owned by Walmart, is ceasing delivery of fresh groceries in New York City only a little more than a year after the service started.

Bloomberg first reported the story, writing:

The retailer will close a warehouse in the Bronx it was using to prepare orders and also let some drivers go, resulting in the loss of between 200 and 300 jobs, according to a person familiar with the decision. Jet — which will continue to sell dry groceries like cereal and other general merchandise — will inform customers of the news Friday and fulfill any existing orders already placed.

Jet’s move into fresh food delivery kicked off last year with a hyper-targeted focus on New York City. In addition to general fresh food, Jet also offered delivery of NYC-specific items from retailers like Bedford Cheese Shop, Orwashers Bakery and Just Bagels. (An interesting sidenote, around the same time as the Jet announcement, Walmart also announced it was acquiring Latin American online grocer, Cornershop. That deal also went bust after facing Mexican regulators).

But as Bloomberg reports, problems plagued Jet’s NYC service from the start with warehouse issues, product price fluctuations, hiked delivery fees and lots of items being out-of-stock.

Walmart acquired Jet.com for $3.3 billion in 2016 [–LINK?–]as part of an effort to expand its customer base and reach urban millennials. But a lot has changed since 2016, and even since 2017 when Jet launched the New York City delivery service.

Spurred on by Amazon getting into the grocery space, Walmart has been quick to expand its own grocery delivery and curbside pickup options independent of Jet. Walmart has been piloting automated micro-fulfillment for faster order assembly, is rolling out its Delivery Unlimited service to 1,400 stores nationwide this year, and is testing out in-home delivery.

And while Walmart lags behind Amazon is overall online grocery retail sales, research this year showed that Walmart shoppers spent more online per for groceries with Walmart than they were at Amazon.

Jet.com closing fresh food delivery in NYC wasn’t the first sign of its flagging importance to Walmart. Earlier this year Walmart conducted a sweeping overhaul of its Jet.com unit after it failed to meet expectations.

Blue Apron Ends Its Jet.com Partnership to Focus on Its ‘Core’ Business

Meal kit company Blue Apron announced this week it is terminating its partnership with e-commerce site Jet.com.

On its August 6 Q2 2019 earnings call, Blue Apron CEO Linda Findley Kozlowski said the company needed to focus on its core business, which is its direct-to-consumer sales of meal kits.

“We have not kept up with the ever evolving needs and preferences of our customers over the past couple of years, and we are behind it,” Kozlowski said on the call, adding that part of the reason for that is because the company “redirected attention of way from innovating in our core offering as we tested alternative distribution channels for the past year and a half.”

Blue Apron made its meal kits available for delivery via the Walmart subsidiary Jet.com in 2018 in NYC. At the time, the company appeared to be looking for ways to revitalize its struggling business through third-party sales channels (the company sold meal kits for a time at Costco stores, too).

But based on this week’s call, that move appears to have been a distraction, and Blue Apron seems to believe stepping away from these third-party sales channels and tapping “unrealized opportunities” within its core business model is the place to invest time and resources at the moment.

To that end Kozlowski outlined a new strategy on the call for the company’s future that includes focusing on fresh food, offering more convenience and flexibility in terms of menu options, making Blue Apron’s various digital touchpoints easier to use, and increasing marketing efforts.

But even if Blue Apron is able to pull its subscription-model business back on track, the company’s long-term viability is still uncertain. Right now, meal kits only account for 21.9 percent of online grocery services used in 2019. NPD recently reported that 93 million adults in the U.S. want to try a meal kit, but the same research also highlighted a shift away from traditional dinner-only mail-order meal kits towards ones that can be found in retail stores and/or cater to other eating times, such as lunch and snacks.

Some meal kit companies have already responded to these trends: Kroger and Home Chef started piloting new meal offerings like “heat and eat” and lunch options, which they sell in Kroger stores. Sun Basket, too, expanded its options to include breakfast, lunch, and snacks, though the company remains a direct-to-consumer subscription service like Blue Apron.

Meanwhile, Blue Apron itself has always had an issue with customer churn, partly because its kits tend to be expensive and time consuming, even for people who love to cook. That means what the company winds up offering customers in terms of more flexibility and convenience in the future will surely give an idea of how successful the company’s renewed focus on its core business will be.

Will Jet.com Help Blue Apron Meal Kits Take Off?

Blue Apron announced today that its meal kits will be made available for delivery in the New York area through a new partnership with Walmart-owned Jet.com. For Blue Apron, which has seen its stock price tumble since it went public last year, the Jet partnership marks another way the company is looking to revitalize its business through new and different retail avenues.

According to the press announcement, starting today, households across “most of” New York City, Jersey City and Hoboken can get Blue Apron meal kits delivered same or next day. The inclusion of Blue Apron’s meal kits is part of Jet.com’s recent site revamp and enhanced shopping experience for New Yorkers.

Blue Apron pretty much kicked off the mail order meal kit craze a few years back, but that particular business model is tough to sustain — for consumers, it’s not particularly convenient, it’s still a lot of work to prepare, and for companies, it’s logistically expensive. Blue Apron’s competition has pretty much all moved into grocery store aisles. Home Chef was acquired by Kroger. Plated was acquired by Albertsons. And while HelloFresh had it’s own IPO, it too is now selling through grocery stores.

For its part, Blue Apron began selling its kits in Costco earlier this year. Earlier this month, Blue Apron also started offering meal kits through food delivery service GrubHub (also only in New York). Now on Jet, Blue Apron will feature a rotating menu of two-serving recipes that range in price from $16.99 to $22.99.

With its stock price hovering at little more than a dollar, Blue Apron is able (or perhaps forced) to experiment more wildly with different approaches to moving more of its meal kits. Blue Apron’s recent moves are reminiscent of Chef’d, which we lauded here at The Spoon for its uninhibited approach to retail. Chef’d struck deals to put its meal kits in drug stores and office fridges… before it shut down. But its assets were picked up and Chef’d was re-born without the mail business to focus on retail outlets.

Along those lines, it wouldn’t be surprising to see Blue Apron announce even more partnerships across even more retail outlets before the end of the year.

Walmart Acquires Cornershop, While Jet.com Gets in a New York State of Mind

Walmart announced yesterday that it is expanding its digital presence in Latin America with the $225 million acquisition of Cornershop, an online marketplace for on-demand delivery from supermarkets in Mexico and Chile. While that move continued the retail giant’s global spending spree, domestically, the company’s subsidiary Jet.com unveiled a revamped website featuring enhanced grocery delivery options in New York City.

Walmart’s purchase of Cornershop is the latest international acquisition for the company. In just this year Walmart has:

Rather than going head-on in its battle with rival, Amazon, Walmart seems to be going around and flanking it, shoring up e-commerce and digital resources around the world.

That’s not to say Walmart has given up its fight against Amazon here in the U.S. Yesterday also saw Walmart company Jet.com launch a revamped website with a new grocery shopping service catering specifically to New York City dwellers.

As part of its pitch to the Empire City, Jet.com is offering products from iconic local businesses there such as Bedford Cheese Shop, Orwashers Bakery and Just Bagels. Customers will also be able to purchase high-end craft beer for delivery.

The delivery itself is also getting an overhaul with next-day and three-hour schedule delivery windows for groceries and more. Delivery will be powered by Parcel, which Walmart acquired last year.

Obviously Walmart/Jet isn’t going to stop at New York City. Look for this type of local-and-fast e-commerce experience to scale out nationwide. Walmart is already putting those pieces together with the recent launch of its Spark Delivery service. Between the logistics data and experience it gets from Parcel, and the local purchase and delivery data Spark will provide, Walmart and Jet will be able to better target customers in different regions around the country.

And with its push into foreign markets, it won’t be too long before it will do it around the world.

BuzzFeed’s Tasty Expands E-Commerce Capabilities with Walmart Agreement

BuzzFeed’s cooking site, Tasty, along with Walmart and Jet.com announced a partnership today that allows consumers to purchase equipment necessary for making certain recipes directly from the Tasty app. The move continues the trend of vertical integration we’ve seen elsewhere in the food world, and sets up BuzzFeed to expand its e-commerce ambitions.

Starting today, Tasty recipes will include direct links to Walmart/Jet.com to buy the tools needed for that dish. Right now, users can only buy hardware items such as a slow cooker, or skillet or measuring cups. The company says it plans to include the purchase of groceries “beginning next year.”

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For Walmart, the partnership gives the retailer access to the enormously popular Tasty base, which has generated more than 65 billion video views and has more than 90 million followers on Facebook. Tasty has already shown that it can move units. As The Spoon’s Mike Wolf wrote last month:

“Last year, the company worked with Oster to run a sponsored cooking video that included the Oster grill. Within a day, the Oster grill had completely sold out on Amazon, despite the fact the cooking video didn’t have a link to the Oster grill Amazon page.”

Recipes are becoming more than a set of instructions, they are becoming more direct commerce vehicles. AllRecipes launched shoppable recipe lists through AmazonFresh earlier this year. And as same day delivery companies like Instacart expand, recipes are no longer constrained by what people have in the kitchen. With instant gratification increasingly available, inspiring recipes can inspire people to pay for the tools and ingredients immediately.

But this also sets the stage for BuzzFeed to expand it’s own hardware ambitions. As the company missed revenue targets, it is expanding its Product Labs, which created the Tasty One Top induction cooking device. From a memo BuzzFeed CEO Jonah Peretti sent out to employees:

“Finally, we are expanding our Product Labs business, which exceeded our expectations in its first full year of operations, into BuzzFeed Commerce which has a strong lineup of new licensing and commerce partnerships, and new products for 2018. BuzzFeed Commerce will work closely with our new BuzzFeed Media Brands team to create new opportunities for our brands in the way it has with Tasty.”

Partnering with Walmart lets BuzzFeed use Tasty as a way to convert the eyeballs of its massive audience into consumers who buy the $149 One Top, or whatever BuzzFeed-branded cooking implement the company wants to create.

BuzzFeed has proven adept at navigating rapidly changing technology trends and fickle attention spans. This deal with Walmart is another great example of the company’s nimbleness by expanding the utility of Tasty in a way that is organic to the experience and potentially adding to the bottom line.