Walmart sells off 2 more digital brands #SmallBiz - The Entrepreneurial Way with A.I.

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Saturday, August 29, 2020

Walmart sells off 2 more digital brands #SmallBiz

#SmallBusiness

Dive Brief:

  • Walmart has made deals to sell off two of its online brands, a spokesperson confirmed for Retail Dive. Shoes.com, which Walmart acquired for $9 million in 2017, is headed to private equity firm CriticalPoint Capital, according to Bloomberg, which first reported the news. CriticalPoint is the owner of the footwear retailer JackRabbit.
  • Digital lingerie seller Bare Necessities, which Walmart picked up less than two years ago, will go to Israeli apparel maker Delta Galil Industries. Delta Galil issued a press release on the acquisition this week
  • Details of the two deals were not made public. A Walmart spokesperson said that both brands still offer a majority of their assortment on walmart.com and that "[t]his transition marks an exciting new chapter for both Shoes and Bare and allows each to focus solely on continuing its own growth under new ownership."

Dive Insight:

As Walmart's digital sales explode amid the pandemic, it is moving quickly to revamp its previous revamp of its online business. 

Already this year, Walmart has announced that it would wind down its Jet business and discontinue its Jet Black shop-by-text service. Those two moves follow the sale of the digitally native ModCloth brand last fall.

Taken together, they represent both a strategic retreat and a refocusing of Walmart's resources. Shortly after the acquisition of Jet.com in 2016, and with it the hire of Marc Lore as the chief of Walmart's U.S. e-commerce business, the retailer set about bolting hip digital brands to the Jet banner

Doing so held the promise of drawing in a younger, affluent, digitally savvy shopper to Walmart. Jet Black, the brainchild of Walmart's Store No. 8 innovation incubator, was launched (and remained) in New York City, where Walmart has no superstore beachhead. It was aimed at young affluent shoppers, but reportedly was losing massive amounts of money. 

Losses in Walmart's e-commerce operations have reportedly been a source of tension within the company. Walmart, not surprisingly, has not commented on any infighting or the extent of the losses. But the company's moves show an about-face in strategy in the past two years. 

Walmart pulled back on marketing spend for Jet, and traffic correspondingly plummeted. Not long after, Walmart announced an end to Jet. ModCloth was sold in the interim. Reportedly, Bonobos has been on the block as well. 

Shoes.com and Bare Necessities were two more relatively recent online acquisitions now slated for divestment. Both deals come on the heels of Walmart's acknowledged interest in an investment with Microsoft in the social media platform TikTok.

At the same time, Walmart has been focusing on its namesake online banner, Walmart.com, as well as its omnichannel offerings like in-store pickup. It has also consolidated its in-store and online buying teams to streamline its sourcing and operations. 

Those efforts started before the COVID-19 crisis, but they have proven effective so far this year. Walmart's digital sales roughly doubled in the second quarter while profit rose by a good chunk as well. Following Walmart's most recent results, Moody's retail analyst Charlie O'Shea said that the retailer "continues to raise the bar for multi-channel retail as the company continues to leverage its massive store base to support its e-commerce initiatives."





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Ben Unglesbee, Khareem Sudlow