Up until now, consumers without a Costco membership have been able to purchase items from the retailer’s Kirkland Signature line through sites like Jet.com. But Walmart, which acquired Jet.com last year, is putting a stop to that.
Bloomberg reports that Jet will soon be phasing out Kirkland Signature products from its site, effectively cutting off a sales avenue for Costco. Laura Kennedy, an analyst for research firm Kantar Retail, says Walmart’s decision shouldn’t come as a surprise. After all, selling items for your competitors is generally not good business.
“Jet is still moving through full integration with Walmart, and it’s something I’m sure Walmart was aware of when it acquired Jet,” she said.
Before being snatched up by Walmart, it made perfect sense for Jet to carry Kirkland items on its site. Like Costco, Jet’s original business model was based on collecting membership fees and passing on savings to consumers who bought in bulk.
But after being bought up, no one really expected Jet to sell Kirkland products for long. Even Costco CFO Richard Galanti said it wasn’t surprising that Jet dropped Kirkland “given who acquired them.” While expected, the move is sure to come as a bit of hit to Kirkland; last year, 5.5% of its sales came from listings on Jet.com.
While Walmart will lose out on a smaller avenue of business from Kirkland sales on Jet, the company has plans to boost its own store brands. Reports indicate that the company is striving to boost sales at its Sam’s Club chain through its “Member’s Mark” brand. Walmart announced in April that it will be adding around 20 new labels under that banner, and Jet has already started integrating Member’s Mark merchandise on its site.