Jet.com Runs Into Turbulence With Retailers
Home Depot, L’Oreal and others pull brands from new discount website
Jet is a new online retail site that hopes to take on Amazon by targeting price-conscious shoppers. But does it stack up? WSJ's Rolfe Winkler gives it a try. Photo: Jason Henry for The Wall Street Journal
Dozens of the nation’s largest retailers including Macy’s Inc., Amazon.com Inc., andHome Depot Inc. have quickly moved to disassociate themselves from new discount retail website Jet.com.
The retailers complained to Jet after discovering it had placed links to their sites without permission, promising its own members cash back for making purchases after clicking the links.
A comparison of Jet’s website on July 1 and on Tuesday reveals that more than 100 brands owned by at least 70 different companies have been removed, most in the week after the company’s July 21 launch.
Companies with multiple brands whose links have been withdrawn from Jet include heavyweights Wal-Mart Stores Inc., Gap Inc., Walgreens, Williams-Sonoma Inc. andL’Oréal SA . “If someone is using our brand without our permission, there are a multitude of concerns, and we’re not going to allow it,” said a Home Depot spokesman, who added that Jet was cooperative in removing his company’s logo after being asked to do so.
Liza Landsman, Jet’s chief customer officer, said some of the merchants requesting their brands be removed were unhappy because they view Jet as a competitor, while others insisted Jet negotiate a deal with them first. Another group of merchants was unaware but was happy for Jet to direct traffic to them, she said.
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Jet launched its online marketplace two weeks ago, promising millions of discounted products in exchange for a $50 annual membership fee. The site is aiming to undercut Amazon and other big retailers.
Membership fees are intended to be Jet’s only source of profits, so the company’s goal is to entice millions of people with cheaper products, whether sold from its own warehouses or through partners on its site that include Toys ‘R’ Us Inc. As an extra incentive, Jet offers an affiliate program that links to hundreds of retailers and rewards its members when they click the links and then make purchases.
The affiliate program is where the retail brands appear under a section of Jet’s website called “Jet Anywhere.” As of Thursday, Jet listed 640 retail sites as part of the program after adding dozens of smaller retailers in recent days.
Jet typically gives 80% of the commission it receives back to its members in the form of “Jet Cash,” said Ms. Landsman. Customers can use that credit to spend on items sold through Jet.com. To get the credit they send an email confirmation back to Jet proving they made a purchase.
The rewards can add up. For example, Jet promises 30% cash back to its members when they buy products on Nike Inc.’s site after clicking its affiliate link, an offer that would cover the cost of Jet’s $50 a year membership if consumers bought one high-price pair of shoes.
Jet Anywhere is also a way to encourage other retailers to sell products directly through Jet by showing them that the site can bring them customers, said Jet founder and CEOMarc Lore.
Jet Anywhere is small but not insignificant: Ms. Landsman said it accounted for 15% of the gross value of merchandise that has been purchased through Jet since launch two weeks ago. Jet counts the value of merchandise purchased on other retailers’ sites via its affiliate links as if it were merchandise sold on its own site.
The extra boost to gross merchandise value could help Jet raise additional capital since, according to people familiar with the matter, it is using the figure as a yardstick to measure progress in pitches to investors. Mr. Lore has said that by 2020, Jet will sell $20 billion worth of merchandise. Perhaps $3 billion of that amount is expected to come via Jet Anywhere, he said.
Typically a company like Jet will sign up individually to join companies’ affiliate marketing programs, a process that can be time-consuming. To jump-start Jet Anywhere, Ms. Landsman said it automatically enrolled hundreds of sites with the help of an intermediary, VigLink Inc.
That made it more difficult for merchants to see that Jet was the ultimate source of clicks.
VigLink Chief Executive Oliver Roup said many advertisers instruct VigLink to send them traffic without asking to approve each individual affiliate, but it will remove any if instructed.
Many of the companies whose brands were removed from the Jet Anywhere program appeared to be unaware that they were listed on the site when contacted by The Wall Street Journal.
Spokespeople for Wal-Mart, Walgreens, Target Corp., Staples Inc., and Estée LauderCos.—who all had their links removed from Jet Anywhere—said Jet isn’t a partner.
A spokeswoman for skin care company Kiehl’s, a unit of L’Oréal, said Kiehl’s had “requested to end the direct affiliate relationship as procedures outlined in our current affiliate program weren't being followed.”
Williams-Sonoma and Neiman Marcus declined to comment. Amazon and Gap didn’t respond to requests for comment.
Online fashion marketplace Bluefly Inc. was surprised to see its brand had been added to Jet Anywhere, said Chief Marketing Officer Carly Rosenberg, a program Bluefly was never told about even though it had been in discussions with Jet since last year to sell products directly on its site. “I felt a little blindsided by it,” said Ms. Rosenberg, “I just think they went about it the wrong way.”
Some big brands added involuntarily to Jet Anywhere are unperturbed. A spokeswoman for Hudson Bay Co., owner of Saks Fifth Avenue and Lord & Taylor, said the company is in discussions with Jet. Steven Schneider, a business development executive with Gilt Groupe Inc. said Jet will introduce his company’s brand to new potential customers.
As Jet dials up its own marketing budget to find new customers, beauty retailer Birchbox Inc. hopes some of them find their way to its site via Jet Anywhere, said its vice president of digital marketing, Ashley Wolf Berman.
