Dozens of the nation's largest retailers including Macy's Inc.,
Amazon.com Inc., and Home 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Companies with multiple brands whose links have been withdrawn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. and L'Oré al 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.
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 CEO Marc 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 Esté e Lauder Cos.—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'Oré al,
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.
Write to Rolfe Winkler at rolfe.winkler@wsj.com
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