Sparta Report

Walmart Expands Its Online Muscle by Buying Up Brands

A few months ago, I talked about how Walmart is planning to create a “virtual mall” to challenge Amazon. Lord & Taylor joined with Walmart to support this, because Walmart is where the clicks are – Lord and Taylor’s website got less than one million page views in almost nine months in 2017.

By way of comparison, Walmart’s site got around eighty million hits in the same time period. Lord & Taylor gambled that by selling their products through Walmart.com, they would be able go “where the eyeballs are.” While I don’t know the impact of Walmart’s deal with Lord & Taylor, they are moving full speed ahead with their plan to create their gigantic virtual mega-mall:

Now, Walmart is shifting its strategy. The company is building an online marketplace to house a variety of recently acquired brands that will largely maintain their independence from Walmart.

“Walmart is recognizing that to be successful in today’s market, you’re better off being a marketplace rather than an empire,” Stephens said.

Walmart recently struck a deal to give the high-end department store chain Lord & Taylor space on its website. It has also been on an acquisition spree, snatching up ecommerce companies that appeal to higher-income customers like Jet, MooseJaw, ModCloth, Shoebuy, Bonobos, and Hayneedle.

Walmart ecommerce head Marc Lore explained the company’s strategy of maintaining independence for these brands at a conference last month.

“Specialist positioning is better than mass,” Lore said, according to TechCrunch. “We’ve empowered the leaders of these companies to basically run the category across the entire entity.”

Walmart is preserving the independence of the brands it’s acquiring at least in part to avoid alienating higher-income shoppers that might not otherwise shop at Walmart, said Ed Yruma, managing director at KeyBanc Capital Markets.

It’s worth noting that Wal Mart’s online sales have been growing like crazy in the last three quarters, so the transformation that Marc Lore has begun seems to be working. We may finally have a real competitor to Amazon, something the industry has needed very badly for some time.

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