Jet.com Isn’t a Unicorn, It’s a Hippo

The following article is based on an episode of Outside In, the customer centricity podcast.

In Silicon Valley terms, Jet.com is a unicorn. It only took the e-commerce startup a little over a year after its launch to be acquired by Walmart for $3.3 billion. But to the company’s president, Liza Landsman, Jet is “a svelte – and muscular – hippo.”

“If you think of Amazon as a great white shark,” she explains, “what consumers are demanding right now is something a lot more amphibious,” more flexible than the pure play model of online ordering. Backed by the resources and scale of the largest retailer in the world (there are more than 4,500 Walmart stores across the U.S.), Jet is a formidable competitor that’s making online shopping more transparent, efficient, and fun.

What sets Jet apart from competitors like Amazon is that it gamifies the shopping experience and puts customers in control of costs. For example, if shoppers pay with their debit card instead of their credit card, forego free returns, or place large, multi-item orders, in exchange they can score discounts on everything from cat food to clothes. The more material costs that consumers take out of the supply chain, the more they can save.

It was all founded on a premise first laid out by Marc Lore, Jet.com co-founder and current president and CEO of Walmart U.S. e-commerce, that many of the basics of the e-commerce supply chain don’t make sense. It’s the consumer who bears the cost of shipping disparate items from different locations across many distances. “All the costs hurt the consumer and hurt the ecosystem,” Landsman explains on an episode of the Outside In podcast.

To lower costs, Jet uses an algorithm to reduce the number of shipments being made and the distance those items have to travel. This eases many of the logistical and cost burdens associated with the expensive “last mile” of delivery – something the e-commerce industry has been trying to do for years.

With 90% of Americans living within 10 miles of a Walmart store, the merging of Jet and Walmart has opened up even more ways of solving some of e-commerce’s biggest challenges. Thanks to Walmart’s massive brick-and-mortar store presence, the company is developing new efficiencies in delivery, fulfillment, and cost reduction. For example, over the past month Jet has been piloting an associate delivery program where Walmart employees can earn extra income by dropping off online purchases on their way home from work.

While Jet’s trajectory has altered a bit since it launched, customers – mostly millennial urbanites – have always been the company’s primary source of inspiration. In its pre-beta days, the company ran the Jet Insiders mini-affiliate program to create interest among early adopters and encourage sign-ups. The top 10 customers who secured the most referrals were rewarded with equity in the company. The 11th, Jet hired. “We like to inject a little humanity in our e-commerce,” says Landsman.

Indeed, much of the company’s early success wasn’t just about getting customers to trust Jet, but getting Jet to trust that its customers would understand the value of transparency. “People were getting our gamified system more quickly and more deeply than we thought,” Landsman explains, buying bigger baskets of goods to get bigger savings. So, Jet abandoned its original membership fee-based model – like that of Costco or Sam’s Club – and pivoted to a new model that opened up the platform to more people. “We looked at the data, did testing for a week, and made the call over a two-week period…That’s the kind of agility and risk taking that has enabled us to grow so quickly.”

While data and analytics certainly have gotten the company far, Landsman, a self-proclaimed math geek, stresses that Jet is “data-informed, not data-led.” She is quick to point out that “there’s no substitute for really interacting with your customers,” and that’s true for even the most senior leaders in the organization. “Data gets you to the five yard line. But common sense and qualitative insight are the things that actually allow you to do groundbreaking things.”

This commitment to garnering a holistic understanding of customers hasn’t wavered since Walmart came on board. “We talk about what the customer wants and needs as part of our decision making process,” Landsman says. Several days a week, Jet employees tune in to a Slack livestream of customer usability tests run out of the company’s customer research lab. Senior leaders regularly interact and meet with customers, and there are bi-weekly customer scorecards and monthly “state of the customer” assessments that keep the entire staff in lockstep with what Jet customers need.

In many ways, it feels like Jet has scratched the surface of what’s ultimately possible in e-commerce. As it looks to the “bleeding edge” of change in other categories and global markets, taking lessons from fast-changing countries like China and Korea, customers will ultimately drive where the company goes next. “Living too much in the present can make you obsolete,” says Landsman. “What is really happening right now is the beginning of the birth of a new kind of retail – the birth of omnichannel.”

With that, it’s going to be fascinating to see what this e-commerce hippo does next.

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