Jet.com founder Marc Lore and Jetblack founder Jenny Fleiss.
Getty Images for Jetblack
The Wall Street Journal last week reported some harrowing information surrounding Jetblack, Walmart’s concierge, text-based shopping service in New York City. According to the Wall Street Journal, the just barely one-year-old initiative is already on the selling block. The sell-off rumor alone should be enough to raise eyebrows, but what is even more alarming is how and why Walmart got to this point in the first place.
Jetblack is a clear case of innovation run amok.
Walmart had no business attempting the Jetblack initiative from the get-go. As I wrote back in June 2018, Jetblack was a doomed effort to start for four reasons:
- Putting “black” at the end of something does not automatically make something cool.
- It is quite difficult to reach a high-end consumer when you still carry the Walmart stigma.
- Jetblack, in its original constitution, does nothing to support Walmart’s core customer and its overall business flywheel.
- Alexa and other services are years ahead and much better answers to the problems Jetblack is trying to solve.
It was easy to see how people could get swept up in the Jetblack hoopla though. Walmart spent a reported $3.3 billion to acquire Jet.com and, more importantly, Marc Lore, himself. Lore was supposed to be a digital messiah. At that price, it was normal to expect that anything Lore touched should turn to gold. So, it is no wonder the media and others were soothed by his siren song of digital acquisitions, VR plays, and concierge services for wealthy Manhattanites. They were all what Lore was supposed to do.
Unfortunately, Lore’s initiatives, when stacked up on their own merits, read more like a brochure for a timeshare than an honest to goodness path to Walmart salvation in the face of Amazon. Jetblack is just the latest in what is now a mounting list of failed and profligate Marc Lore initiatives.
Drum roll, please . . .
First, there was Lore’s digitally-native brand spending spree, where Lore convinced Walmart to gobble up the likes of Bonobos, Modcloth, Moosejaw and others. Modcloth has now been sold to Go Global Retail after barely two years, Bonobos is now planning layoffs, Moosejaw hit a major roadblock with the Black Diamond fiasco, and then, in a recent interview with Jason Del Rey of Recode, Lore himself even claimed that the digital brand acquisition strategy has now “shifted” to grow more brands in-house vs. via acquisition, which, by the way, is a strategy Walmart’s competitors and Walmart itself have all done for decades prior to Lore’s arrival.
Next, there was Spatialand, a VR startup that, like Jetblack, was borne out of Lore’s Store No 8 incubation arm, but, also like Jetblack and the acquisition spending spree referenced above, it too has amounted to nothing more than parking lot PR gloss from back in February about how to train dragons. News ever since has been quieter than a church mouse, and, lo and behold, Spatialand’s CEO Katie Finnegan also exited stage left just four months later in June, after a mere hot minute on the job.
Then there was Lore’s video of grocery delivery directly to Walmart customers’ refrigerators, which debuted in and around the Walmart shareholders meeting in June. It was a video meant to excite and delight the media and shareholders alike, but watch the video for yourself and you will quickly see that the idea has a snowball’s chance in hell of working and that the use of Sam Walton’s pickup truck in the announcement would make even the man working behind the curtain in the Wizard of Oz squeamish.
Oh, and then there’s Jet.com too. Not much more needs to be said about that one though, as Walmart folded Jet.com into its mainline e-commerce operations this past summer, but, sure, lots of $3.0 billion plus brands get acquired and then never heard from again a mere three years later.
Happens all the time, right?
And, yet, despite the overwhelming laundry list above, it is Jetblack that is by far and away the most egregious case of all. The statistics reported by the Wall Street Journal, if true, are downright embarrassing.
First, the Wall Street Journal reports there are only 600 members active in the Jetblack service.
Seriously, only 600 members? 600 members is nothing. The neighbor kid likely mows more lawns on demand in the summer. And, if there’s only 600 members, why has Walmart also been so quick to repeat the refrain over the past year that there is an exclusive wait list, where “thousands” were at one point waiting to join the Jetbaclk service. Is all this reported wait list talk real? Or, is one man’s wait list just another person’s table for one?
Second, the Wall Street Journal also reports that Walmart is losing a whopping $15,000 per member and has budgeted $60 million for Jetblack annually.
These numbers are also insane.
I asked a Walmart spokesperson to comment on the reported statistics and the state of the wait list for this piece, but no additional comments or background was shared in time for publication.
Even if one goes against pragmatism and thinks that Jetblack is still a good business idea, Walmart still should not be spending $60 million per year on it.
One, the opportunity cost of that money is too high, for Walmart could reimagine itself for the same price tag! For $60 million, Walmart could create its own version of a Hema grocery store, and not just one, but maybe even two or three to boot. A reminagination of the Walmart grocery experience is needed far more for the long-term health of Walmart than the bourgeoisie pipe dream that is Jetblack.
Two, no startup of the size and scale of Jetblack should ever have $60 million allocated to it after nary a year of operations. Shame, shame, shame on Walmart and on the self-respecting leaders who asked for that much money so early on.
Now the Jetblack initiative finds itself on the chopping block, and, for any prospective buyer contemplating the purchase of Jetblack, there is nothing left to say but two words:
Yes, buyer beware. Whoever buys this bag of chips will have no one to blame but him or herself when the jig is up. The writing is on the wall.
Rather than sell Jetblack to a rube, Walmart should instead take the high road and simply shut Jetblack down outright and admit defeat. For, while there are no lemon laws in retail, Jetblack clearly makes a case for them in this instance.
All kidding aside though — could Walmart even spot a lemon if it was squeezed right under its very nose?
After all, it did buy Lore and Jet.com.