Walmart's Jetblack is likely a worthwhile investment despite high start-up costs

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Walmart's Jetblack isn't currently profitable — but the retailer is willing to take the hit for two key reasons:

in New York City last June, is on the rise. In September, members were spending an average of $300 per week for products, and users are now buying over 10 items a week, which is driving up spending totals, The Wall Street JournalThese gains could indicate that the service presents potential for the company and was likely a worthwhile investment despite high start-up costs.

Orders are handled by couriers who will first try to source items from Walmart or one of its units, but will use any store a customer wants, including Walmart's chief rival, Amazon. Items are fetched and then brought to a Manhattan delivery hub where they are packaged and delivered by hand, usually at same-day speeds. Attributesspeed and convenience are particularly important to customers using delivery services, which could be part of Jetblack's appeal.

The simplicity that Jetblack provides with its text message interface could encourage loyalty and boost competitive positioning. An easy, responsive interface style like Jetblack's can go a long way toward helping Walmart compete with other subscription services like Amazon Prime, especially among busy moms, which are Jetblack's primary target demographic.

Physical retailers can close the gap in personalization by identifying consumers when they enter, tracking them throughout their journey, and then using that information to inform individualized offerings.

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