By Scott Shamberg, U.S. President of Performics, the performance marketing arm of Publicis Media.
Amazon has been pushing itself into offline channels more successfully than Walmart has through online channels, and now Walmart is making a direct play against Amazon online. Early on, Walmart had its stores and a head start on the ad revenue front via Triad. But Amazon caught up, surpassed Walmart in ecommerce and is progressing in ad revenue. Currently, only 7% of Walmart’s revenue is generated from online sales. When Amazon started to push into the physical world—distribution centers, droids for delivery, etc., it hit close to home for Walmart, and Walmart knew it needed to make a big splash online.
Making a Play for Millennials
Despite ranking #2 behind Amazon in online retail traffic, Walmart falls behind in online sales. As Walmart taps into Jet.com’s younger audience, it has hopes of stealing some of the highly-valuable—and growing—Millennial demographic from Amazon. Digital-native Millennials are more likely to purchase online vs. Baby Boomers (Walmart’s current main audience). And—according to recent data from Performics and Northwestern University’s research study, the Digital Satisfaction Index™—Millennials are much more comfortable in providing personal information online while shopping vs. Baby-Boomers. This personal info results in personalized experiences and recommendations, something that Amazon currently excels at. Millenials are Walmart’s future audience, and with Jet.com, it will make a run at winning share from Amazon.
Expanded Advertising Revenue
Beyond B2C, Walmart could also gain interest from brands looking to advertise on Jet.com. Recently, brands have seen success in leveraging retail engine paid advertising—like Amazon’s new Sponsored Search Ads—to capture and convert demand. As many consumers now start their product research journeys on Amazon vs. Google, our advertisers have been increasingly dedicating media budget to Amazon.
In the more distant future, look for Walmart/Jet.com to start competing with Amazon for advertising dollars. For instance, Walmart currently partners with HookLogic, a retail search marketing exchange that enables brands to run CPC-based paid search advertising within retail site native search results pages (e.g. Walmart.com search). We could eventually see HookLogic-type ads on Jet.com, or Walmart could even build a sponsored search platform, much like Amazon’s emerging platform. Opportunities like this are very appealing to advertisers, as they enable us to connect to consumers at the digital point-of-sale on Amazon or Walmart.com.
Additionally, this acquisition will create more incentive for Amazon to offer the lowest rates, best customer service and fastest delivery speed.