Wal-Mart ‘look­ing’ for on­line re­tail­ers

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM - ROB­BIE NEISWANGER

Wal-Mart Stores Inc. has been ac­tive on the ac­qui­si­tion front the past sev­eral months, us­ing its cap­i­tal to snap up on­line re­tail­ers to boost its e-commerce busi­ness.

The Ben­tonville-based re­tailer isn’t show­ing any signs of slowing the spend­ing. Wal-Mart U.S. e-commerce chief Marc Lore said last week the com­pany is con­sid­er­ing other pos­si­bil­i­ties af­ter re­port­ing do­mes­tic ecom­merce sales in­creased 29 per­cent in the fourth quar­ter.

“We’re open and look­ing at all pos­si­ble op­por­tu­ni­ties to en­hance cus­tomer-value propo­si­tion and ex­pand our mer­chan­dis­ing ex­per­tise and brand re­la­tion­ships,” Lore said dur­ing a con­fer­ence call with the me­dia. “So there’s a lot of cat­e­gories that fit that de­scrip­tion and we’re ac­tively look­ing.”

Wal-Mart has taken an ag­gres­sive ap­proach in its com­pe­ti­tion with on­line re­tail­ers like Ama­zon.com, be­gin­ning with the $3.3 bil­lion ac­qui­si­tion of Jet.com last fall. The trans­ac­tion also in­cluded home-fur­nish­ings re­tailer Haynee­dle.com. Since Lore has been in charge of Wal-Mart’s U.S. e-commerce oper­a­tions, the com­pany has

pur­chased shoe and ap­parel com­pany ShoeBuy.com for about $70 mil­lion and added out­door on­line re­tailer Moose­jaw for $51 mil­lion.

Neil Stern, a se­nior part­ner at Chicago-based re­tail con­sul­tant firm McMil­lan-Doolit­tle, said cap­i­tal has long been a weapon for the re­tail gi­ant. But Wal-Mart is “chang­ing tack a lit­tle bit” with its lat­est moves.

“They’ve been very ag­gres­sive in buy­ing tech­nol­ogy com­pa­nies, but those aren’t cus­tomer-fac­ing,” Stern said. “[Moose­jaw] and ShoeBuy are dif­fer­ent be­cause they’re buy­ing cus­tomer-fac­ing brands.”

Col­lec­tively, the ac­qui­si­tions have given the re­tailer ac­cess to new cus­tomers with brands that don’t typ­i­cally sell their items in Wal-Mart stores on or Walmart.com. It also has helped Wal-Mart in­herit ecom­merce ex­per­tise in spe­cific cat­e­gories, which the com­pany is tak­ing ad­van­tage of by plac­ing the lead­ers of Haynee­dle, ShoeBuy and Moose­jaw in charge of their re­spec­tive ar­eas at Wal-Mart.

Carol Spieck­er­man, a re­tail con­sul­tant and pres­i­dent of Spieck­er­man Re­tail, be­lieves “any and all cat­e­gories are fair game” for fu­ture ac­qui­si­tions as the com­pany tries to fill niches. Spieck­er­man also said it would be a “short-sighted waste” if the com­pany didn’t take ad­van­tage of the tal­ent and cat­e­gory ex­per­tise avail­able through the trans­ac­tions.

“ShoeBuy and Moose­jaw give Walmart in­stant author­ity in two im­por­tant niches, shoes and out­door,” Spieck­er­man said in an email. “If Walmart had in­ter­nal ex­per­tise in th­ese cat­e­gories, there would have been no need to make the ac­qui­si­tions in the first place.”

Wal-Mart’s in­ten­tion was clear in the case of Moose­jaw. Eoin Comer­ford, the out­door re­tailer’s CEO, said Wal-Mart

sim­ply called the com­pany to in­quire about a po­ten­tial deal.

Comer­ford and his team are now over­see­ing the out­door cat­e­gory across Wal-Mart’s e-commerce plat­forms. He re­cently de­scribed Wal-Mart’s strat­egy of com­pil­ing com­pa­nies and tap­ping into their ex­per­tise as “ge­nius.”

“The abil­ity to go get best of breed e-commerce play­ers that are lead­ers in their ver­ti­cals and let them do what they do … it’s go­ing to be in­cred­i­ble,” Comer­ford said. “Not only are you go­ing to have this suite of on­line play­ers that by them­selves are strong and much stronger be­cause of this as­so­ci­a­tion, but then to have that level of tal­ent and en­ergy and pas­sion around the in­di­vid­ual ver­ti­cals is also go­ing to am­plify the over­all com­pany, too.”

Not ev­ery­one is con­vinced the strat­egy will pay off for Wal-Mart.

Brian Yar­brough, a re­tail an­a­lyst with Ed­ward Jones, said Wal-Mart’s goal is clear. But

he ques­tions the ef­fect it will have on a com­pany whose ecom­merce sales still rep­re­sent a small per­cent­age of its $485.9 bil­lion in an­nual rev­enue.

“Even if they roll up a bunch of th­ese small deals, at the end of the day, they don’t move the nee­dle,” he said. “Maybe longer term they can in­te­grate all th­ese busi­nesses and have this well-oiled ma­chine that can pro­duce com­pa­ra­ble prof­its.”

Wal-Mart said it will con­tinue op­er­at­ing each web­site it has ac­quired as stand-alone en­ti­ties, but there is in­te­gra­tion go­ing on be­hind the scenes. Lately, some of it has been vis­i­ble to cus­tomers.

Hun­dreds of Wal-Mart’s pri­vate- la­bel prod­ucts — Great Value, Equate and Sam’s Choice — have been avail­able on Jet.com’s web­site since Feb. 1. Spokesman Dan To­porek said Wal-Mart isn’t break­ing out the num­ber of pri­vate-la­bel prod­ucts that are avail­able, but Wal-Mart now has the ca­pa­bil­ity to put any­thing from

Walmart.com onto Jet.com.

For now, To­porek said the ad­di­tion of pri­vate-la­bel items will help fill some gaps in as­sort­ment at Jet.com as a way to “of­fer good prod­ucts at a low price to a broader au­di­ence.”

Spieck­er­man said it makes sense and be­lieves it’s just a sign of things to come as WalMart’s port­fo­lio con­tin­ues to grow.

“Walmart is now a mul­ti­for­mat, port­fo­lio com­pany, which pro­vides the op­por­tu­nity for brands to mi­grate among the grow­ing num­ber of plat­forms and brand ban­ners that are join­ing the Walmart fam­ily,” Spieck­er­man said in an email.

When asked for more de­tails last week, Lore did not in­di­cate where Wal-Mart could turn next as it con­tin­ues look­ing for more re­tail­ers to add to its on­line oper­a­tions. But the com­pany is search­ing.

“Ex­pect us to con­tinue to look for th­ese strate­gic op­por­tu­ni­ties where it makes good busi­ness sense,” Lore said.

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