Walmart’s purchases of digitally native brands is part of a broader strategy to attract Millennial customers to the company. The acquisitions of Modcloth, Jet and Bonobos are targeted to expand in specific categories, and if that’s not possible, the company will build internally instead, said Andy Dunn, founder and CEO of Bonobos and SVP of digital consumer brands at Walmart.
“[We’re] trying to create a portfolio of these brands that give us proprietary content for a reason for [a] millennial to come shop inside the Walmart ecosystem,” said Marc Lore, president and CEO of Walmart Ecommerce U.S., reported AdAge (March 22). “We’re not going out making billion dollar acquisitions. We’re buying companies that can help accelerate us to the fundamentals.”
The acquisitions by Walmart build out its strategy for Jet.com, which Walmart acquired for more than $3 billion in 2016 along with the between $50-$75 million it spent on Modcloth and $310 million for Bonobos in 2017. The company recently realigned how Jet is trying to acquire more customers, by focusing on the urban Millennial, rather than trying to attract customers in the middle of the country who have a higher lifetime cost to acquire.
Walmart will remain focused on digitally native brands with a high repeat purchase interval in searching for acquisitions. The rationale for acquisitions, like the ones they made for Bonobos and ModCloth, include bringing in new customers, particularly Millennials and that the cost to buy a brand is cheaper than if it were to build it, which is a length process.
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