Dive Brief:

• New York City last-mile delivery company Parcel, which Walmart acquired last year, has bid farewell to its CEO Jesse Kaplan, Bloomberg reported. Kaplan founded the company in Brooklyn in 2013. Parcel’s Chief Operating Officer Jackson Fratesi will take the lead for the company, which has 200 employees.
• A spokeswoman for Walmart’s Jet unit told Bloomberg it was a natural point for Kaplan to step down. The loss of leadership could be a big blow to Walmart’s efforts to attract online grocery business in New York City, which has strong competitors such as Amazon, Ahold Delhaize’s Peapod and FreshDirect.
• Walmart, whose U.S. online sales grew to 32% last quarter, acquired Parcel last year for Jet grocery delivery during the company's major e-commerce push. The retailer also works with DoorDash, Deliv and Postmates for delivery in other cities.  

Dive Insight:

Walmart acquired Parcel last October to utilize its routing algorithms and fleet of leased vehicles to provide same-day, last-mile grocery delivery for Walmart and Jet customers in New York City. At the time, Walmart said that investment in the city was worthwhile because of its proximity to fulfillment centers and the density of the area.

While there are other companies that offer algorithm-based service, last-mile delivery and real-time updates, Parcel stood out for its homegrown presence in nearby Brooklyn. With its existing infrastructure, it provided Walmart with immediate access to untapped NYC shoppers. Kaplan was also addressing a problem he had experienced directly as a young urbanite, and his insight into what his customers wanted and needed may have been just as valuable as his operational expertise. 

Even without Kaplan at the helm, Parcel should continue aiding Walmart's push into New York. Historically, Walmart—which does not have any stores in the city limits – hasn’t been popular in NYC. In fact, the retailer is rarely welcome to open stores in any major city. But its expanding e-commerce offerings and same-day delivery through Jet, enabled by Parcel, is a major effort to woo urban millennials who seek the ease of delivery and the low prices that Walmart can offer. While Walmart hasn’t had a notable brick-and-mortar presence there, it could have a very bright e-commerce future.

While Walmart is making its way into the area and Jet is seen as a solid option among New Yorkers, it still faces stiff competition from Amazon, Peapod, FreshDirect and Instacart, which all have a solid footprint in the area. Still, with the massive population and the prevalence of online shopping and grocery delivery in urban areas, there may be enough business to go around. 

Walmart’s efforts in New York are likely to be unique to this region. Still, Walmart could learn a few e-commerce and delivery lessons from its efforts in New York to bring it success in other large cities, where shoppers are more likely to soften their stance on the company with the promise of quick grocery delivery and impressively low prices.