Walmart to shut down

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Walmart to shut down

By Dan Berthiaume - 05/19/2020

Walmart is ending a $3 billion experiment at operating a digitally-native retailer.

The discount giant will cease operating its e-commerce subsidiary at an unspecified date. Walmart announced its intention to shutter in a two-sentence statement in its Q1 2020 earnings report: “Due to continued strength of the brand, the company will discontinue,” Walmart said. “The acquisition of nearly four years ago was critical to accelerating our omni strategy.”

Walmart U.S. e-commerce sales beat analyst expectations by growing 74% during the quarter, with strong results for grocery pickup and delivery services, the e-commerce site and Walmart Marketplace third-party online retail platform. These results came as e-commerce sales in general spiked during the quarter due to the impact of the COVID-19 pandemic. Walmart also likely benefited from having its stores open as an essential retailer, enabling omnichannel fulfillment of online orders.

Walmart initially purchased for $3 billion in 2016, one year after the e-tail startup was founded. The acquisition was seen as an attempt to directly compete with Amazon in the pure-play e-commerce market.

However, never really took off as a standalone e-commerce brand. Since purchasing the e-tailer, Walmart has taken steps including folding the team into the Walmart e-commerce organization and relaunching as an urban-centric offering. In November 2019, Walmart ended a yearlong pilot of fresh food delivery in New York City.

Walmart has also recently been reducing operations of some of its other digital ventures. In February, Walmart discontinued Jet black, a text-based, personal-shopping service. In October, the discounter reduced headcount at its Bonobos omnichannel menswear brand and sold its Modcloth online indie fashion subsidiary.

In December, the Wall Street Journal reported Walmart may have lost as much as $2 billion on e-commerce. But the retailer is still aggressively pursuing expanded online competition with Amazon with services such as its less-than-two-hour Express Delivery offering. Presumably by consolidating e-commerce operations and innovations under the umbrella, the company hopes to continue growing online revenue with lower overhead.

This story originally appeared on Chain Store Age