The world’s largest retailer is using Jetblack, a money-losing personal-shopping service, to develop artificial intelligence to compete with e-commerce giant Amazon
Walmart is using Jetblack’s army of human agents to train an artificial intelligence system that could someday 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, said Jetblack CEO Jenny Fleiss.
.. Walmart is competing with Amazon, which has $233 billion in annual sales, including web services.
.. Walmart is the world’s biggest retailer by revenue, with $514 billion in annual sales, but e-commerce makes up only a small percentage. That’s out of sync with where retail is growing fastest. Across the U.S., online shopping accounted for 9.7% of total retail sales last year and grew 14.2% from the previous year, according to the Commerce Department.
Walmart bought India’s biggest e-commerce site. It has been buying up small online retailers including men’s apparel company Bonobos and is testing autonomous cargo vans for home grocery delivery in places such as Surprise, Ariz.
.. it is one of the biggest gambles Walmart is making to attract wealthy shoppers and burnish its tech credentials.
Walmart primarily views the company as a research hub on AI and voice shopping.
.. Marc Lore, head of Walmart’s U.S. e-commerce business, had in mind a Jetblack-like service before Walmart bought his e-commerce startup Jet.com in 2016. That website sells products that appeal to urban shoppers, including higher-end brands that won’t sell on Walmart.com.
Mr. Lore was fascinated by the idea of a premium service that allowed shoppers to order products for speedy delivery by speaking into the air, said people familiar with his thinking. “This is a Marc Lore passion project,” said one former Walmart executive.
.. One former Walmart executive said Jetblack is “the first thing that we’ve tried that will unwind you” consistently from Amazon Prime. “The early indication is that it has legs,” even if the point isn’t earning profits, the former executive said.
Jetblack members are spending an average of $300 a week for products because the ease of the service encourages more frequent purchases ..
.. The average shopper is buying more than 10 items a week, said Ms. Fleiss. Average spending a week is higher than last September, said a company spokesman, but he declined to say how much Jetblack members spend a week or how many of those products come from Walmart.
.. Customer-service agents, often recent college graduates drawn to the startup culture of Jetblack, need to become experts on wealthy New York City moms. Agents have two weeks of training, in part to learn what products babies need as they move through different developmental phases so they can make better product recommendations.
.. Moms—the vast majority of members—sometimes text fast requests like “reorder cereal.” When a Jetblack member joins, an employee usually goes to the customer’s home to inventory the products the person uses, giving agents a database of frequent purchases. Software automatically suggests a product if it is a frequent purchase or was scanned in the customer’s home.
.. It takes agents slightly longer to place an order for “item requests,” when the shopper knows exactly what they want but hasn’t ordered it before. Even more time-consuming are “recommendations,” open-ended requests such as “I need a new yoga mat” or “I need a birthday present for a 9-year-old.”
.. Agents consult a file that combines past purchases, products agents have researched and recommendations made by Jetblack merchandising workers, then suggest around three items for the customer to choose from, current and former employees said. Sometimes agents head to Google to do research, said one of these people.
.. Through the dialogue, the system is learning which follow up questions to ask, said Ms. Fleiss. For example, if a shopper asks for a new stroller, the system might learn to next ask “For how many children?” and “Do you need your child to nap in the stroller?” Members buy one of the recommended products 80% of the time, she said.
.. Jetblack also learned it still needs traditional technology. It created a companion app because some shoppers don’t like to update credit card information or review past orders over text.
Workers stock up on frequently purchased items by taking a daily van to a Jet.com warehouse and Walmart stores in New Jersey, since New York City has no physical Walmart stores, ordering products online for pickup. Later this year Jetblack plans to use a new Walmart fulfillment center in the Bronx to collect some products faster, said a spokesman.