- Walmart is looking to sell its members-only personal-shopping service Jetblack, after reportedly losing $US15,000 per member annually, according to a report from the Wall Street Journal.
- If the business is spun off, CEO and cofounder of Rent The Runway Jennifer Fleiss would effectively step down from her position.
- The company has struggled to grow outside of its small, exclusive member base in New York City, largely a result of crippling operating fees, the Journal reported.
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According to documents obtained by the Wall Street Journal, Jetblack was haemorrhaging money to the tune of $US15,000 annually per member – which across its 600 active members totals upwards of $US9 million. The deficit is largely a result of the service’s promise to provide the cheapest value on goods – ranging from toilet paper to designer dresses – even when procuring them meant Jetblack had to purchase items at a higher price for a loss, the Journal reported.
Jetblack first began working with shoppers in New York City in May 2018, with the vision of being a one-stop shop for busy, affluent mothers. For $US50 a month, members can text “J” to request items or seek out recommendations, and in turn will receive responses either from real-life employees or an AI bot.
From the beginning, Jetblack was predicated on exclusivity, and Fleiss was open about the selective nature of the invite-only app.
“We want people who are going to commit to changing their shopping behaviour. Our customers really stop shopping on other channels,” Fleiss told Business Insider earlier this year.
She also spoke as recently as June about the possibility of expanding into new cities beyond New York. Fleiss told Business Insider’s Dennis Green that Jetblack consumers had actually provided feedback that the service had proven so valuable that they would pay more money for it.
“Anyone who has used us for more than a couple of months tells us they would spend more,” Fleiss said. “So now I’m like: Oh wow, did we underprice it?”
Turns out, that may have been the case. The company was additionally financially struggling thanks to expensive operational components such as the texting service, and ordering and delivering from vendors that spanned beyond Walmart networks.
Walmart has been looking to spinoff the company since last summer, according to the Wall Street Journal, after proving to be a “costly project serving a small customer base.” A source close to the story told reporter Sarah Nassauer that if the company is sold, Fleiss will effectively step down as CEO, though Walmart will continue to hold a stake in the business.
Walmart declined Business Insider’s request to comment.