Walmart has announced that it will discontinue its Jetblack personal shopping text service on Feb. 21.
The subscription program, which combined human and artificial intelligence to offer product recommendations to upscale customers in Manhattan and Brooklyn, was the first project launched from Walmart’s Store No8 technology incubator in 2018.
Members, who paid $50 a month, were able to text orders for non-perishable items to Jetblack and receive delivery at their doors. While most of the items sold came from Walmart or Jet.com, the service also procured other products from local retailers and brand suppliers.
Walmart President & CEO Marc Lore and Jetblack CEO & Founder Jenny Fleiss — November 12, 2018 in … [+]
Getty Images for Jetblack
“We’ve learned a lot through Jetblack, including how customers respond to the ability of ordering by text as well as the type of items they purchase through texting,” wrote Scott Eckert, SVP, next generation retail and principal, Store No8, in a Walmart blog. “We’re eager to apply these learnings from Jetblack and leverage its core capabilities within Walmart.”
In a RetailWire online discussion last week, BrainTrust experts considered just how much Walmart learned from the endeavor.
“The digital space is all about failing fast and often,” wrote Ryan Mathews, CEO of Black Monk Consulting. “What Jetblack teaches all of us — including Walmart — is that sometimes you shouldn’t stay at the party so long.”
“Walmart is slowly working its way into a more upscale market, but I don’t think people that can afford $50/month are going to use it on a personal Walmart shopper,” wrote Paula Rosenblum, managing partner at RSR Research.
“This was such an odd approach to retail that its demise is no surprise,” wrote consultant Ken Lonyai. “It also portends little insight about conversational commerce which this kinda-sorta was in an unusual way. If there’s any lesson to learn it’s this: solve customer needs or cautiously uncover their unexpressed desires, but avoid technology for technology’s sake and un-vetted concepts at all costs.”
Walmart company spokesperson Ravi Jariwala told CNBC that 58 of Jetblack’s 350 employees will be integrated into the retailer’s conversational commerce technology team.
The discontinuation of Jetblack is part of a larger effort for Walmart to rein in costs on its unprofitable digital properties. Over the past year, Walmart has sold ModCloth, cut staff at Bonobos and Jet.com, and closed the Omaha headquarters of Hayneedle.
The Wall Street Journal reports that Walmart was losing about $15,000 a year on each Jetblack member. Jenny Fleiss, a co-founder of Rent the Runway and CEO of Jetblack going back to its launch, left the company in October. She was replaced by Nate Faust, Walmart senior vice president of e-commerce logistics.
The financials struck some on the BrainTrust as being out of kilter.
“I don’t exactly understand why Walmart was losing so much money each year per customer,” wrote Ms. Rosenblum. “That’s hard to do with software unless it was allocated costs. Perhaps it will become clear later.”
“There are plenty of startups working with very little capital to solve real problems,” wrote Cynthia Holcomb, CEO of Prefeye. “Well-funded retailer innovation labs quickly become well-funded projects in search of a real-world reason for being. This was a misguided use of funds. If Walmart were a startup the Jetblack ‘exploration’ would have never been funded by investors.”