Wal-Mart ‘looking’ for online retailers
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.