Walmart said yesterday that it is shutting down its Jetblack concierge shopping service, which it launched in New York City in 2018 but never was able to scale up in terms of market penetration or profitability.
It had been reported that Walmart was looking to either sell or find a partner to share the pain, but it was unable to do so. The service will shut down on February 21.
Jetblack's value proposition was that it would deliver anything - not just Walmart products - to anyone in the city for $50 a month.
According to the Journal, "Some members of Jetblack’s technology and design team will become part of Walmart’s wider customer organization, continuing to work out of New York." Walmart plans to lay off 293 of Jetblack’s 350 employees.
Some context from the Journal:
"Jetblack was launched publicly in 2018 as part of an innovation arm at Walmart dubbed Store No. 8, where the company intends to build technology and business units that aren’t immediately profitable but could be integrated into the larger company in the future.
Walmart executives have talked about Jetblack as a potential avenue of growth and research, not as a profit center. As of last summer, Jetblack was losing about $15,000 per member annually … Walmart aimed to use Jetblack’s human agents to train an artificial-intelligence system that someday would power an automated personal-shopping service, preparing Walmart for a time when web-browser search bars disappear and more shopping is done through voice-activated devices."
From the Tech Crunch coverage:
• "The retailer is trying to spin the shutdown as a learning experience, noting that part of the initiative was to test and build technology that could eventually be applied to other parts of Walmart’s business. In Jet black’s case, Walmart learned about conversational commerce and how customers could use text messages to shop."
• "To be fair, a high-end shopping service was largely an experimental concept for Walmart to dabble in, and it’s not surprising that it didn’t take off. After all, the Walmart brand today is aligned with cost savings and mainstream America, not necessarily the well-to-do, time-strapped urban parents to whom Jet black aimed to cater. It also overlapped with Walmart’s own home delivery options, including its successful Walmart Grocery service, which could deliver the fresh food Jet black could not."
- KC's View:
Walmart has made a series of big splashes over the past few years with big and small investments in technology and e-commerce companies, with the perception being that it was in the process of transforming a legacy company into something better positioned to compete with Amazon, albeit with the advantage of a massive bricks-and-mortar footprint.
Now, with divestitures and closings, it would appear that Walmart is backing off a bit, at least in part because a bunch of unprofitable businesses tend to have an impact on its stock price, of which it is highly aware.
Just to be fair to Walmart, it would be hypocritical to suggest that this approach is bad business; in many ways, this is what Amazon does - it tries lots of stuff, and when something doesn't work, it moves on. But what remains to be seen is whether Walmart is as committed as it needs to be to the transformation of its business to a rebooted model … if, indeed, you think that such a transformation needs to take place.
The other question it raises is about Marc Lore's future at Walmart. He came over when Walmart bought Jet, and there seemed to be some empire building going on here. But the empire is shrinking, and the betting here is that when Lore's contract ends, he'll go off to wait out his non-compete period and then start something else.