Why Jetblack Was Doomed All Along

It’s time to pour one out for Walmart’s exclusive text-to-shop service Jetblack, which launched in May 2018 for consumers in Manhattan and Brooklyn and “ended [its] current operations” last week.

According to a post on the Jetblack site, parent company Walmart plans to roll the technology into the broader organization “to power its conversational commerce capabilities and build new experiences for customers,” so this may not be the last we’ve seen of its text-to-shop functionality.

The idea behind Jetblack was to allow subscribers to text their shopping needs and for the retailer to then tap into a combination of artificial intelligence and human buyers to offer product suggestions for next-day delivery.

A few months after Jetblack’s launch, co-founder and CEO Jennifer Fleiss said the service had a long wait list and members were ordering more than 10 items per week. Now, Jetblack says it will stop servicing orders Feb. 21 and is refunding customers their last $50 monthly fee.

A Walmart spokesperson said the company has learned “customers respond to and love the ability to order through text,” as well as what they like to order, which includes groceries, birthday gifts and diapers.

“As we said in the beginning when we launched Jetblack in 2018, part of the initiative was to start testing and building the technology with the intent that it could be used in other ways, including applying it to other parts of our business in the future,” the spokesperson said.

Testing and learning is a must for Walmart if it’s going to remain competitive with you-know-who—Amazon—which has a long history of experiments and reinventing its own flops.

“I think it’s great [Walmart] experimented with it,” said Sucharita Kodali, vice president and principal analyst at research firm Forrester. “I’m sure they learned a lot about what works and what can be automated versus what needs human intervention.”

At the same time, Kodali said Jetblack was doomed because high labor costs in the U.S. make ad hoc deliveries expensive, and, therefore, it’s hard to reap a profit. She estimates the $50-a-month fee covered the cost for about two orders a month—and members were using it more frequently.

“Unless Jetblack had a 200% markup on all products, which I don’t think it did, it was not going to make money,” Kodali said.

In addition, she pointed to “few parameters on what could be ordered” along with “high-maintenance customers.”

“I’ve no doubt shoppers were sent on hours-long wild goose chases and Easter egg hunts that just added to the cost,” she added.

What’s more, John McKinven, CMO of retail consulting firm Newmine, said it’s easy to downscale brands, but “almost impossible” to upscale them. Look no further than Volkswagen’s ill-fated luxury model, Phaeton, for example.

“Appealing to and building a new demo base takes a fresh start with a unique product,” he added. “The intersection of a business built on cost-cutting efficiency does not mix well culturally or operationally with a bespoke service that necessarily ignores efficiency.”

Matt Klein, director of strategy at the consultancy Sparks & Honey, agreed the $600-a-year fee wasn’t a good fit for Walmart shoppers.

“That’s like trying to peddle a 2001 Bordeaux at an Olive Garden,” he added. “It doesn’t make sense.”

In addition, Klein said Jetblack added another layer between customers and their purchases.

“The underlying appeal of Jetblack was exclusivity through membership and special discounts, not shopping through texts,” he said. “If the focus was on saving time, the effective strategy would have been to address and speed up existing pain points rather than creating brand new paths around them.”

In the end, the world—or at least the U.S.—may not be ready for text-based commerce yet.

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