It’s been two and a half years since Walmart began testing its white-glove concierge shopping service dubbed Jet black. After much speculation that Walmart would spin-off the venture given its negative cash flow, the retail giant said Thursday (Feb. 13) it will end the service.
Jet black will cease operations Feb. 21 and nearly 300 employees will be laid off in the restructuring move. Walmart said 58 employees will join Walmart as the operation is rolled into Walmart’s customer organization.
Walmart has sought ways to consolidate leadership and stem losses, having done that with Jet.com in recent months. The retailer said Store No. 8 goals are to launch new capabilities that can eventually be fueled by the Walmart engine. A greater focus on this work has been on understanding customers and how to better serve their diverse needs.
“We’ve learned a lot through Jet black, including how customers respond to the ability of ordering by text as well as the type of items they purchase through texting. We’re eager to apply these learnings from Jet black and leverage its core capabilities within Walmart,” said Scott Eckert, senior vice president of next-generation for Store No. 8.
Eckert said when Jet black was launched, part of the initiative was to test and build technology that could be used in other ways, including applying to other parts of the business. He said Walmart has explored a number of areas in conversational commerce, from Jet blacks’ text-based ordering to voice ordering in pickup and delivery. He said Walmart believes this technology will be an important way the company serves customers in the future.
“We are only beginning to explore how the capabilities being developed within Store No 8 can complement one another and be leveraged to enhance the customer experience. We look forward to sharing more updates from the team as we work together to shape the future of retail at Walmart,” Eckert said.
Walmart unveiled the service in the summer of 2017 that was by invitation only. Jet black customers paid $50 a month for the service that afforded them a shopping assistant accessible by text. The service was exclusive to certain sections of Manhattan and the shopping assistants made purchases on behalf of the customers from various places including Walmart competitors. The service also provided giftware and same-day delivery.
Walmart never disclosed how many customers it served on Jet black, merely stating there was a waiting list. Walmart said the impacted employees would be offered severance packages based on their eligibility. The 58 employees who remain with Walmart will remain in New York, report to Janey Whiteside, chief customer officer, and focus on conversational commerce.
This move was not a surprise as Walmart continues to stem its losses estimated to be $1 billion this year on its e-commerce and ancillary businesses. In October, Jenny Fleiss stepped down as leader for Jet black and Nate Faust took over as CEO for the venture. Fleiss was retained as an advisor.
Annibal Sodero, professor of supply chain at Ohio State University, has told Talk Business & Politics he would not be surprised to see Walmart begin reducing losses in ventures like Jet black. He said while machine learning was at the core of the Jet black experiment, it also takes people who have to refine the algorithms and teach the machines to react favorably to customer requests. He said the pilot has been incubated by Walmart and standing on its own would be a new ballgame without Walmart support.
Sodero said data sets gleaned from a Jet black venture would be rich for a retailer like Walmart. He said it will be interesting to see if and how Walmart leverages the data to benefit the company. Otherwise, he said expensive pilots like this one won’t be worth the time and effort.
“Walmart has one of the richest data sets in the world on consumers from those who shop in stores and online. But they have not yet revealed what their strategy is for all this data they are collecting. Without knowing their strategy is it impossible to determine if the acquisitions, pilot tests and other initiatives have the potential to move the needle forward for Walmart,” he said.