Why Walmart Launched Jetblack, an Artificial Intelligence Backed Personal Shopping Service
By Tricia McKinnon
In May of last year Walmart launched its Jetblack service in New York City. Jetblack is a personal shopping service that customers access via text message. The service’s tagline is: “Need It. Text It. Get It. Jetblack is the easiest way for busy parents to shop”. Jetblack is a standalone company within Walmart’s Store No. 8 tech incubator which is focused on helping Walmart stay ahead of retail trends. In addition to Jetblack the incubator is working on Project Kepler an initiative focused on creating cashier-less stores similar to Amazon Go, as well as a virtual reality project.
1. How the service works
The service costs $50 per month and all a customer needs to do is send a text with a shopping request. The service can fulfill almost any shopping request as long as it doesn’t involve food, alcohol or prescription drugs. Jetblack’s CEO Jenny Fleiss says that there are typically three use cases for service. One is to reorder frequently purchased items such as toilet paper, another is to get a recommendation for something such as a birthday gift for a friend and the third involves sending a text message with a picture of a specific product (i.e. a screen shot of something a customer has seen online) but the customer does not want the hassle of finding the product online or they do not feel like taking the time to enter their payment information.
If a customer is looking for a recommendation for a birthday gift, for example, Jetblack responds with a text message containing pictures of recommended gift ideas. The products customers end up purchasing through the service do not all come from Walmart. Professional buyers purchase goods from Pottery Barn and Saks in addition to Walmart depending on the request. In approximately 33% of conversations customers ask for recommendations. The recommendations have proven to be effective with customers accepting a recommendation made by the service 79% of the time. In addition to product recommendations, customers receive free gift wrapping and free returns which are picked up by couriers. There is no minimum order value and all purchases are delivered to customers either with same day or next day delivery.
One of the primary benefits of the service is to save customers time. Speaking about the program Fleiss said: "ultimately you need to believe that we can save you at least a couple of hours a month" in order to feel like the $50 a month, cost of the service, is worth it.
Although the service is not profitable yet and currently only available in New York Fleiss’ “big vision” for the service is to create a personal shopping service that is available to everyone (instead of just the small segment of customers the service is available to today).
2. Why Walmart is doing this
One of the reasons Walmart launched this initiative is so that it can learn more about conversational commerce which is shopping that takes place online via text messages, voice commands and online chats. Many believe that this is an important part of the future of retail. While many enjoy the convenience of shopping online too much choice can create a poor shopping experience. Walmart believes that in the future and even today customers may not want to browse through a seemingly infinite number of items online and instead may want a more efficient and effective way of shopping. Using simple commands via text or voice to source purchases may help to fill this need.
At times a real-life person is used to curate product recommendations for customers and other times artificial intelligence (AI) is used. For example, artificial intelligence is used to handle simple customer requests such as reordering items. Over time it is expected that Jetblack’s AI will be able to provide more recommendations based on the customer’s purchase history. Fleiss has suggested that at in the future AI might be able to handle 95% of interactions with customers. This will allow Walmart to collect data from thousands of conversations and millions more in the future which will make Walmart’s predictive recommendations more accurate.
Finally, Walmart is trying to tap into additional markets for growth. Within the last few years it bought Jet.com, Modcloth and Bonobos as a way to capture more urban, millennial as well as affluent customers. This initiative will allow Walmart to capitalize on the growing segment of working moms, many of which could benefit from a service like this. The $50 per month price tag which is significantly more than Amazon Prime ($13 per month or $119 per year) signals that Walmart is going after a more affluent client base.
The service is still small with only a few hundred customers and is not profitable yet. The typical member orders 10 items per month and spends approximately $300 per week. Walmart sees this as a promising business. According to a Wall Street Journal report, a Walmart executive said: “it's the first thing the company's tried that can separate the customer from Prime.” "The early indication is that [Jetblack] has legs."