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Walmart is putting an end to Jetblack, a personal shopping service that used a combination of professional shoppers and AI to send consumers product recommendations via text message and fulfill orders that came from the same channel, per $4.
Jetblack $4 in May 2018 - coming out of Store No. 8, Walmart's tech incubator - but never expanded beyond New York City. The service will stop handling orders after February 21, after which Walmart will bring some of Jetblack's technology and design team into its organization, laying off 293 of Jetblack's approximately 350 employees in the process.
Jetblack was reportedly significantly unprofitable, and it was unclear how it would fit under Walmart's umbrella if it expanded, which may explain why it's being shut down. The service was said to be losing $15,000 per member a year, according to $4, which was likely due to Jetblack's efforts to offer both low costs and fast delivery.
And because Jetblack fulfilled orders with products from any merchant, not just Walmart and its subsidiaries, it may not have fit within Walmart's long-term plans for its business. Walmart explored an outside investment in Jetblack or selling it, but those talks have reportedly ended, possibly leading Walmart to discontinue the service.
Integrating learnings and technologies from Jetblack could still benefit Walmart and would match its recent moves to restructure its e-commerce business.
Jetblack's operations may provide Walmart with tools to better its product discovery experience. It's possible that Walmart used Jetblack to improve its AI capabilities since the service likely saw and handled a number of orders for consumers.
This could allow Walmart to improve its ability to provide consumers with personalized recommendations and search results based on the AI. Walmart also now has some insight into how to operate a personal shopping service, something it could incorporate pieces of - like personalized communications and on-demand delivery - into future services to deepen its offerings.
After an extended run of digital-focused acquisitions and innovations, Walmart has been moving away from operating them separately and is now integrating them into its business. Walmart $4 a number of firms, like Jet.com and Hayneedle, and developed some digital-focused brands on its own, like $4, in an effort to bolster its e-commerce business.
In the past, it appeared that Walmart might be content to allow these subsidiaries to operate separately while learning from them, but that may no longer be the case. Walmart is $4 Jet.com's staff into its own and has given Jet.com a narrower focus on urban markets, it's laid off portions of $4 and $4 staff while integrating the remaining workers, and it even sold off prior acquisition $4.
These decisions suggest that Walmart has moved on from collecting digital firms and is now working to consolidate their capabilities to benefit Walmart's retail business specifically, but it remains to be seen if the integrations will meaningfully improve Walmart's e-commerce sales.
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