Photo: Store No. 8/Instagram
How will Jetblack lessons inform Walmart’s conversational commerce efforts?
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 come from Walmart or Jet.com, the service also procured other products from local retailers and brand suppliers.
In a post on the Walmart blog, Scott Eckert, SVP, next generation retail and principal, Store No8, writes that the Jetblack pilot was part of a larger exploration into conversational commerce with a mindset that it be an “important way” for the retailer to serve its customers in the future.
“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,” writes Mr. Eckert. “We’re eager to apply these learnings from Jetblack and leverage its core capabilities within Walmart.”
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.
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.
- Moving Jet black from Incubation into our Broader Business – Walmart
- Walmart to End Jetblack Shopping Service – The Wall Street Journal
- Walmart will discontinue high-end Jetblack service this month – CNBC
- Walmart sells ModCloth, seeks Jetblack spinoff and cuts Bonobos jobs – RetailWire
- Is Walmart at an online crossroads? – RetailWire
- Walmart’s newest service brings texting and personal shopping together – RetailWire
Discussion Questions
DISCUSSION QUESTIONS: What lessons do you think Walmart learned from its Jetblack experience? How will this affect the retailer’s future actions around conversational commerce?
Poll
BrainTrust
Ken Lonyai
Consultant, Strategist, Tech Innovator, UX Evangelist
Cynthia Holcomb
Founder | CEO, Female Brain Ai & Prefeye - Preference Science Technologies Inc.
Jetblack is just one of numerous initiatives that contribute to Walmart’s deep body of knowledge about what is/isn’t working for their customers. Walmart has become a very sophisticated and capable retail innovator and while it’s impossible to know exactly how the Jetblack experience will inform future decisions, it’s safe to say that Walmart learned a lot. If there’s one thing Walmart has become especially capable at it’s innovation, testing, launching and discontinuing initiatives that don’t work.
Is anyone surprised that Jetblack didn’t work out? $600 a year as a subscription just to have the service? Gee, please let me know if anyone is surprised. I find it hard to imagine that a company as well run as Walmart would have pursued this venture. Being able to text orders is nice to have; having same-day delivery is fine, but for $50 a month? I don’t think so. There are so many new offers every day it’s hard to keep up with the next big thing, but most of them fail — why? Because the retailers are not in touch with the customer’s needs and are basing their concept on what they believe and not what the customer wants.
Unfortunately, today big business has so much money they can afford to lose as they chase after the one big win and as a result, we are going to see many startups, new ideas, and new technologies come and go as the big investors dump money waiting for the one big win. We’ll see what’s next and who’s next, but I’d like to see a smart business learn what their customer wants and not make assumptions only to fail once the time and their money runs out.
It is great that Walmart experimented with Jetblack and that it tried sometime new. I am sure there are many learnings it gleaned from the venture. I take two things away from it. First, in a market like NYC which is already saturated by choice, it is hard to scale this kind of service – especially among consumers who probably already subscribe to Amazon Prime and other subscription offerings. Second, while conversational commerce has a role to play, that role might not be best suited to more discretionary spend on impulse purchases. I think the volumes are too low as people are also happy to use other methods for purchasing – like surfing online and looking in stores where they can more easily see and appreciate products.
Walmart learned that this technology is not yet ready for prime time. There is not enough information to know the specifics of what they learned but hopefully it will inform whatever direction and tools they try next. Conversation is a challenging hurdle, which I have recognized as I watch friends with accents try to use Siri or navigation systems.
I guess there’s a two part answer here.
I don’t exactly understand why Walmart was losing so much money each year per customer. That’s hard to do with software unless it was allocated costs. Perhaps it will become clear later.
I think there are bits and pieces that Walmart took from experimenting with this app that may be applied to future retail ventures. I think the main lesson learned is that they can do the next iteration better themselves, as they learned with the rest of the companies they purchased over the past few years.
For many reasons, this was such an odd approach to retail that its demise is no surprise. 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.
There are lessons to be learned from all experiences, and Walmart’s Jetblack initiative is no exception. Walmart has made significant strides with its digital portfolio via acquisitions, and they have now either acquired or developed its in-house digital capabilities. Walmart has also demonstrated that they are not unwilling to fail and drive new innovations and services.
Jetblack was an ambitious plan, but in a market such as NYC there is an overabundance of choice and Prime along with other competitive shipping solutions are major obstacles. This certainly will not deter Walmart, as we should expect Walmart to reimagine what conversational commerce could be.
I suppose we will have to wait and see if Walmart learned anything from this doomed-from-the-start experiment. Upscale customers? at Walmart? Spending $600 a year for texting capabilities and delivery? Where exactly is the differentiated value, and who exactly are all these upscale Walmart shoppers? I hope they learned a heck of a lot for their $15,000 investment per customer…
Biggest lesson: that Walmart doesn’t have “upscale” customers? Or perhaps that their customer base just doesn’t shop like that at all (they still predominantly have a physical shopper)? In either case, to me, ALL tests are valuable. Now Walmart knows; welp, that didn’t work. So well played, Bentonville — on to the next play.
An innovation lab in search of an “exploration,” funded by resources almost every other startup has to bootstrap to achieve, utilized on a project to gain insights into how rich people use conversational commerce. Common sense would dictate that such an “exploration” should surely explore the masses of Walmart customers rather than the proclivities of the rich. There are plenty of startups working with very little capital to solve real problems. 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.
Part of the story here is Walmart’s willingness to try new things, and pull back when an effort fails. The more they learn, the less time they’ll spend on ideas that are ultimately fruitless.
Look, the digital space is all about failing fast and often. What Jetblack teaches all of us — including Walmart — is that sometimes you shouldn’t stay at the party so long, especially when you are driving profits into the ground. That said, Walmart has deep pockets and the fact that the market for what Jetblack offered doesn’t exist today doesn’t mean it wasn’t worth the investment. We forget that the only way most of us learn is the hard way, through our mistakes. So the real lessons here are: don’t let failure be the enemy of success, don’t stop being bold, learn when it’s time to cut and run, and remember, what didn’t work today may work just fine tomorrow, so nothing is necessarily a bad idea forever.
Walmart needs to lead the business in finding how a retailer’s physical presence can be made stronger — and that physical presence makes for strong online sales as well.
The Jetblack failure is yet one more indicator (along with very weak continuing Wayfair numbers) that there is not a strong economic model for solely online stores nor for over-hyped instant delivery (to the very rich).
So in Walmart’s recipe for growth, online is merely a single spice. How much of that spice and of what flavor should it be?
If you look on Twitter you can see that among the upscale customers that used this Walmart service was Jennifer Hyman, CEO of Rent the Runway. She tweeted that Jetblack provided amazing value and service for her as a new parent in helping her to juggle her personal and work responsibilities on a daily basis. While recognizing the service targeted the 1% luxury market, she rightfully pointed out that if you’re going to target this demographic, you’re likely to find success in a city like New York.
So what can Walmart learn from this besides the fact that there is a 1% luxury market in NY (which granted they didn’t need this experiment to learn that)? For one, running such a service must create exorbitant costs to be losing $15k per customer per year. That sounds quite difficult to do for what is essentially a software-based service, so I have to assume the logistics of delivering any random product a customer requests within the same day meant extreme difficulty in managing inventory and having enough labor to fulfill the requests.
Second, I suspect they learned something about using AI in conversational commerce to interact with customers that they can apply in other areas. Ultimately, the fact that a retailer with the deep pockets of Walmart couldn’t make this service effective without severe losses tells us that there may be a limit to personalized services.
Fans of classic game shows might remember how “Password” worked. One person was given a word and the other said related words in hope of eliciting it. Suffice it to say “Walmart” does not elicit “upscale.” Whether one views this as a success or a failure depends, I imagine, on the expectation … viable business or “learning experience.” What if anything they learned I don’t know, but $15K/year loss PER CUSTOMER is a rather startling figure, even if not for them a particularly painful one.
If retailers want to gain/maintain any momentum then they have to try a variety of approaches and methods. As long as there is applicable learning involved with a reasonable “cost per lesson” this was a good initiative. Retailers have to “test and learn,” which of course is not the same as “test and churn,” whether it’s new products, or new experiences. What doesn’t work is standing still.
Kudos to Walmart for experimenting with JetBlack, among many other initiatives.
Most of the $15,000 loss per client is more likely in the set-up of the program rather than the execution. Furthermore, the loss on their financial statement is really an investment in understanding a new marketplace and technology.
Successful companies like Walmart are constantly moving/investing their pieces in the puzzle for efficiency and new programs.