Harvard Case - Walmart's Jetblack: Managing Luxury Service on Conversational Commerce
"Walmart's Jetblack: Managing Luxury Service on Conversational Commerce" Harvard business case study is written by Gaganpreet Singh, Sanjit K Roy, Kiran Pedada, Laknath Jayasinghe. It deals with the challenges in the field of Marketing. The case study is 11 page(s) long and it was first published on : Jan 10, 2021
At Fern Fort University, we recommend that Jetblack pivot its strategy from a luxury concierge service to a personalized, data-driven platform focused on convenience and customer loyalty. This shift will involve leveraging Jetblack's existing technology and customer insights to offer a seamless, omnichannel experience across various product categories, while maintaining a focus on personalized recommendations and exceptional customer service.
2. Background
Jetblack, a subsidiary of Walmart, launched in 2018 as a luxury concierge service catering to affluent customers. The service offered personalized shopping experiences, curated product recommendations, and rapid delivery through a text-based interface. However, despite initial hype and a strong customer base, Jetblack struggled to achieve profitability and ultimately shut down in 2020.
The case study highlights the challenges Jetblack faced in balancing its luxury positioning with the need for scalability and profitability. The service's high operating costs, limited product selection, and reliance on a high-touch customer service model proved unsustainable in the long run.
3. Analysis of the Case Study
To understand Jetblack's struggles, we can analyze the case using a combination of frameworks:
1. SWOT Analysis:
- Strengths: Strong brand association with Walmart, advanced technology platform, customer data insights, potential for personalization.
- Weaknesses: High operating costs, limited product selection, lack of scalability, reliance on high-touch customer service.
- Opportunities: Expanding into new product categories, leveraging data for personalized recommendations, building a loyal customer base.
- Threats: Competition from established players in the e-commerce space, changing consumer preferences, potential for technology disruption.
2. Porter's Five Forces:
- Threat of new entrants: High, due to the low barriers to entry in the online retail space.
- Bargaining power of buyers: High, as customers have access to a wide range of alternatives.
- Bargaining power of suppliers: Moderate, as Jetblack relies on a network of suppliers for its products.
- Threat of substitute products: High, with various online retailers offering similar products and services.
- Competitive rivalry: Intense, with established players like Amazon and Target constantly innovating and expanding their offerings.
3. Customer Behavior Analysis:
- Jetblack's target market of affluent customers seeks convenience, personalization, and high-quality products.
- However, this segment is also price-sensitive and expects value for their money.
- The reliance on a text-based interface may have limited Jetblack's reach and appeal to a broader audience.
4. Marketing Strategy Analysis:
- Jetblack's initial marketing strategy focused on building brand awareness and exclusivity through targeted advertising and public relations.
- However, this strategy failed to attract a large enough customer base to achieve profitability.
- The lack of a clear value proposition and a focus on luxury positioning may have alienated potential customers.
4. Recommendations
To address Jetblack's challenges and achieve sustainable growth, we recommend the following:
1. Pivot to a Personalized, Data-Driven Platform:
- Leverage Jetblack's existing technology and data to offer a personalized, omnichannel experience across various product categories.
- Focus on convenience, speed, and value for money, rather than luxury positioning.
- Offer a wider range of products and services, including groceries, household goods, and electronics.
- Implement a tiered membership model with varying levels of benefits and pricing.
2. Build a Loyal Customer Base:
- Focus on customer retention through personalized recommendations, loyalty programs, and exceptional customer service.
- Utilize data analytics to understand customer preferences and predict future needs.
- Offer exclusive deals and promotions to encourage repeat purchases.
3. Optimize Operations for Scalability:
- Streamline operations and reduce costs by leveraging Walmart's existing infrastructure and supply chain.
- Implement automation and AI to enhance efficiency and reduce reliance on high-touch customer service.
- Explore partnerships with other retailers and brands to expand product offerings and reach.
4. Enhance Marketing and Branding:
- Reposition Jetblack as a convenient and personalized shopping platform for a wider audience.
- Emphasize the value proposition of speed, convenience, and personalized recommendations.
- Utilize digital marketing channels, including social media, search engine optimization (SEO), and email marketing, to reach target customers.
5. Continuously Innovate and Adapt:
- Stay abreast of emerging trends in e-commerce and technology.
- Experiment with new features and services to enhance the customer experience.
- Monitor competitor activity and adjust strategies accordingly.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: Leveraging Walmart's existing infrastructure and technology while focusing on customer value aligns with the company's mission of providing low prices and excellent service.
- External customers and internal clients: The proposed strategy addresses the needs of a broader customer base while offering a more scalable and profitable business model.
- Competitors: By focusing on convenience, personalization, and value for money, Jetblack can compete effectively with established players in the e-commerce space.
- Attractiveness ' quantitative measures if applicable: The proposed strategy has the potential to increase revenue and market share, while reducing operating costs and improving profitability.
6. Conclusion
By pivoting to a personalized, data-driven platform focused on convenience and customer loyalty, Jetblack can overcome its previous challenges and achieve sustainable growth. This strategy leverages Walmart's strengths, addresses the needs of a broader customer base, and positions Jetblack for success in the competitive e-commerce landscape.
7. Discussion
Other alternatives not selected include:
- Maintaining the luxury concierge model: This approach would likely continue to struggle with profitability due to high operating costs and limited scalability.
- Focusing solely on Walmart's existing e-commerce platform: This option would limit Jetblack's ability to differentiate itself and capture a larger market share.
Risks associated with the recommended strategy include:
- Competition from established players: Jetblack will need to continuously innovate and adapt to stay ahead of competitors.
- Technology disruption: Emerging technologies could threaten Jetblack's existing platform and business model.
- Customer adoption: The success of the new strategy depends on customer acceptance and engagement.
8. Next Steps
To implement the recommended strategy, Jetblack should:
- Develop a detailed roadmap: Outline specific milestones and timelines for each phase of the transition.
- Invest in technology and infrastructure: Upgrade the existing platform and integrate with Walmart's systems.
- Build a strong marketing and branding team: Develop a comprehensive marketing plan to reach target customers and communicate the new value proposition.
- Monitor and analyze performance: Track key metrics and adjust strategies as needed to ensure success.
By taking these steps, Jetblack can transform itself from a struggling luxury concierge service into a successful, data-driven e-commerce platform that delivers value and convenience to a wide range of customers.
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Case Description
In 2018, Walmart, the world's biggest retailer, launched Jetblack, a concierge luxury shopping service that allowed consumers to explore and buy items via text message. It is a classic example of the danger of introducing a relatively luxurious brand into the portfolio of a non-luxury brand family. Jetblack's service combined artificial intelligence (AI) and the customized attention of trained experts to identify the most appropriate products for its customers. Following the launch of Jetblack, customer enrollments grew and both the frequency and breadth of member shopping increased. Its initial customers also stated that texting was their favorite aspect of the service. However, Jetblack's inability to scale its business operations proved to be a major challenge, with dire financial implications. By 2019, Jetblack was losing around USD 15,000 per customer annually. On February 21, 2020, Walmart announced that it was shutting down its exclusive concierge shopping startup, Jetblack, due to limited end user customer enrollments and inadequate investments.
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