Jet.com, a division of Wal-Mart Stores, Inc. (NYSE:WMT), announced that it will debut new premium, private-label products on its website, beginning today. The merchandise, branded Uniquely J, will provide what the company calls "a new brand of everyday essentials." Jet.com, one of the fastest growing e-commerce companies in the U.S., will offer a "carefully curated" list of 50 items including coffee, cleaning products, laundry supplies, pantry goods, and food storage.
This is all part of a larger strategy by the company to win over the hearts and minds -- as well as the wallets and purses -- of millennial shoppers.
Bold beautiful packaging and "Badass Espresso"
The company focused on areas it believed to be of importance to millennials, such as plant-based ingredients in its cleaning products, BPA-free plastics for its food storage bags, and USDA Certified Organic and Fair Trade Certified beans for its coffee. Jet.com wants to eliminate the trade-offs, providing consumers with style and value without sacrificing quality.
The company also paid particular attention to the look. The products feature "bold and beautiful packaging, specially designed by artists Jet.com partnered with from around the world." The website introduces the product line saying, "Meet your new favorite everything," and features product names with attitude, like Badass Espresso.
These premium products are intended to appeal to millennials, who have become the largest shopping demographic in the world. According to Meredith Klein, Jet.com's director of public relations, "Uniquely J is yet another way Jet.com is innovating for the metro millennial. From the boldly designed packaging, to the fun, witty label copy and quality ingredients -- everything was designed with this metro consumer in mind."
A whole new world
When Wal-Mart purchased Jet.com for $3.3 billion late last year, it raised more than a few eyebrows. The upstart e-commerce purveyor launched in mid-2015, promising the guaranteed lowest prices online on more than 10 million items, and was lauded early on as a potential competitor of Amazon.com (NASDAQ:AMZN). Jet.com also provided a variety of ways for shoppers to save even more, like switching from a credit to a debit card, or waiving their right to return items, each in exchange for additional discounts.
Jet.com's founder Marc Lore, who now handles Wal-Mart's e-commerce operations, believed a large cohort of shoppers were looking for savings. "I saw a big opportunity to go after the much larger segment of the market, which was people who cared about saving money," he said. "So I came up with this idea where consumers could save 10 to 15 percent below the lowest prices online."
That target market sat squarely in Wal-Mart's wheelhouse, though at the time, e-commerce hadn't yet become the priority that it is today for the retail giant. In line with its increased emphasis on younger shoppers, Uniquely J products are designed to avoid the stuffy image of their corporate custodian and the perceived lower quality of its other private-label brands like Sam's Choice, Equate, and Great Value.
Taking on a titan
Jet.com has its work cut out for it. Taking Stock With Teens, Piper Jaffray's twice-annual teen research project, recently released its fall 2017 report. The study revealed that nearly 50% of teens named Amazon.com as their favorite website, up from 43% just six months earlier. While millennials are slightly older than those surveyed, the findings are likely relevant to them as well.
With Lore's help, Wal-Mart has instituted a number of innovations designed to resonate with these shoppers. He launched Pickup, a service that lets customers choose from over a million of the retailer's most popular items, order them on its website, and have them available for in-store pickup, many on the same day.
For this program, the company is testing a high-tech vending machine called the Pickup Tower that allows customers to scan a bar code on a purchase receipt to have packages dispensed from the kiosk. Since roughly 90% of the U.S. population is within 10 miles of a Wal-Mart store, this offers a convenient way for shoppers to get what they need.
The company also launched free two-day shipping for online orders over $35. Lore has also been testing a system that uses Wal-Mart employees to make last-mile deliveries to customers on their way home from work.
Early signs of success
The results from Wal-Mart's most recent quarter show its efforts are bearing fruit. The company's online sales grew 60% year over year, while gross merchandise volume jumped 67% over the prior-year quarter. Lore believes that e-commerce won't be a winner-take-all proposition. Appealing to millennials with a variety of pickup and delivery options and higher-margin premium products will likely contribute to the company's continued success.
Danny Vena owns shares of Amazon and has the following options: short December 2017 $75 calls on Wal-Mart Stores, long January 2018 $57.50 calls on Wal-Mart Stores, long January 2018 $55 calls on Wal-Mart Stores, and short December 2017 $75 calls on Wal-Mart Stores. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.