Walmart to Scale Back Jetblack After Investor Talks Fizzle -- Update

By Sarah Nassauer 

Walmart Inc. is restructuring its Jetblack personal shopping service, as some of the talks it held with potential investors last year have ended, according to people familiar with the situation.

The New York City-based unit, which offers fast product delivery through text message, plans to rebrand and in coming months would cease to be a personal-shopping service, some of these people said. Its technology could be moved within Walmart, they said.

Last year, Walmart worked to spin off the unprofitable unit, which had less than a thousand customers as of last year. The retailer discussed an investment with several potential partners including Microsoft Corp., and venture-capital firms including New Enterprise Associates, The Wall Street Journal reported at the time.

Those talks have ended, some of the people said.

Jetblack's chief executive Jenny Fleiss left last year, succeeded by Nate Faust, Walmart senior vice president of e-commerce logistics, who had previously worked for Jet.com, the e-commerce startup Walmart bought in 2016.

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, the Journal reported.

Jetblack members pay $600 a year to order anything except fresh food by text message. Their orders go to a Jetblack office where agents sitting at computers field customer requests, from diaper reorders to requests for suggested yoga attire. Couriers fetch the items so they can be hand delivered, usually the same day.

Walmart was using Jetblack's human agents to train an artificial intelligence system that would some day power an automated personal-shopping service, preparing Walmart for a time when the search bar disappears and more shopping is done through voice-activated devices, Ms. Fleiss said last year.

Walmart, which reports quarterly earnings next week on Tuesday, has worked to stem losses from its smaller e-commerce units over the past year, selling units or cutting staff in those businesses. Walmart folded most of the remaining Jet.com staff into the rest of its operations last year and laid of workers at Bonobos, the men's apparel retailer it owns.

Last month Walmart closed the Omaha corporate headquarters of Hayneedle, the online furniture site it inherited along with Jet.com. "We are integrating the Hayneedle business" within Walmart but keeping the website open for business, a spokeswoman said earlier this month.

Write to Sarah Nassauer at [e-mail]

(END) Dow Jones Newswires

February 13, 2020 10:20 ET (15:20 GMT)

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