Walmart to buy Bonobos for $310M as it doubles down on fashion

Walmart to buy Bonobos for $310M as it doubles down on fashion

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Walmart to buy Bonobos for $310M as it doubles down on fashion
Walmart today doubled down on its efforts to continue building out a online retail fashion business in its bid to outpace Amazon in the wider world of commerce and specifically e-commerce. Today it announced that it would acquire menswear site Bonobos for $310 million in cash. The deal is part of a bigger strategy at […]

Walmart today doubled down on its efforts to continue building out a online retail fashion business in its bid to outpace Amazon in the wider world of commerce and specifically e-commerce. Today it announced that it would acquire menswear site Bonobos for $310 million in cash.

The deal is part of a bigger strategy at Walmart, the worlds largest physical retailer, to grow its e-commerce business, partly to offset competition from Amazon. But perhaps in a very intentional bit of timing almost at the same time that Walmart announced its Bonobos acquisition, Amazon announced it would be buying Whole Foods for $13.7 billion, giving it a very, very significant leg up in its budding food retail business. That underscores even more how important it is for Walmart to continue expanding into new areas.

In fashion specifically both have been making several acquisitions and launching labels to expand their customer bases.

Walmarts Bonobos deal follows and complements several other acquisitions that the retail giant has made in the area of online fashion. They include Modclothin March 2017,outdoor retailer Moosejaw for $51 million in February 2017,Hayneedlein March 2016, and Zappos-style shoe retailer ShoeBuy for $70 million from IAC. Many of these have been fuelled by its acquisition of Jet.com, which it purchased in 2016 for $3 billion.

Rumors had been circulating of the deal between Bonobos and Walmart for a while, and as predicted, this in part is a way to bring Andy Dunn, who had founded and was leading Bonobos, into a wider leadership role at Walmart. He will be taking on a bigger and new role for us at eCommerce, a Walmart spokesperson said, overseeing our digital vertical brands.

We now have a strong brand and offering for Women in ModCloth and a strong brand and offering for Men in Bonobos. Andy will oversee both and has the chance to really play offense in this space.

He will be reporting to Marc Lore, president and CEO of Walmart U.S. eCommerce (who joined with the Jet.com acquisition).

We began Bonobos ten years ago to give men a completely different product and shopping experience: better fitting, higher quality clothing, in new and imaginative ways. That will always remain our mission, Dunn, who will oversee Walmarts collection of digitally-native vertical brands, said in a statement. We are excited about applying all that we have learned to help shepherd in the next era of retail.

Walmart, the worlds biggest physical retailer, has been looking for more ways to grow its e-commerce business in competition with Amazon, and it sees fashion and targeting younger users as a key part of that strategy.

Walmart said that in the last quarter its e-commerce sales were up 63 percent, with the majority coming from organic growth in Walmart.com meaning it has yet to prove that its big acquisition play to buy into digitally native brands has or will pay off.

Were seeing momentum in the business as we expand our value proposition with customers and its incredible to see how fast were moving, said Lore in a statement. Adding innovators like Andy will continue to help us shape the future of Walmart, and the future of retail. Im thrilled to welcome Andy and the entire Bonobos team. Theyve created an amazing product and customer experience, and that will not change. In fact, Andy will be a great influence on the company, especially in leading our collection of exclusive brands offered online.

Bonobos had raised just under $128 million, with the last round in 2014, and had always said it had its sights set on an IPO. Clearly, things took a different turn. In a Medium postpublished today, Dunn noted that the company was on the verge of closing a new round of funding, although in the end, it chose the acquisition route instead.

One of the big issues is that to win in e-commerce, you need economies of scale, and in that regard it may have proven to be too much of a challenge for the company. Whats interesting is that one of Bonobos specialties has been building a connection between online and offline shopping, which is something that Walmart may be interested in tapping.

There is another interesting parallel between Walmart and Amazon in its acquisition strategies: both are very much taking a page from Apples playbook of aiming at premium customers. Whole Foods is sometimes known as Whole Paycheck for being so expensive to shop in. Bonobos and other fashion purchases that Walmart has made, meanwhile, are not known for cut-price goods. In both cases, Amazon and Walmart have built reputations on being super competitive (read: cheap) on pricing, but they both appear to be turning a new leaf with their new waves of business.

Updated with clarification on Dunns role at Walmart, and adding more information about Bonobos funding story.

Read more: https://techcrunch.com/2017/06/16/walmart-to-buy-bonobos-for-310m-in-its-bigger-push-into-fashion-retail/

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