Dive Brief:
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Wal-Mart’s e-commerce unit Jet is in advanced talks to acquire menswear e-commerce site Bonobos, Re/Code reports. Wal-Mart didn’t immediately respond to Retail Dive’s request for comment.
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Sources told Re/Code the companies have come to terms on price and the deal's finalization is pending due diligence.
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Wal-Mart-owned Jet has been on a shopping spree of late, most recently acquiring women’s e-commerce apparel and accessories site Modcloth last month for an undisclosed amount, and previously buying online footwear site Shoebuy for a reported $70 million and outdoor e-commerce retailer Moosejaw for $51 million.
Dive Insight:
Bonobos is just the latest e-commerce startup in Wal-Mart's sights after the acquisitions of Modcloth, Shoebuy and Moosejaw. Unlike many e-commerce startups, 10-year-old Bonobos is reportedly profitable and has been using its latest investments to push further into brick and mortar.
Bonobos co-founder Andy Dunn once famously said that the company was predicated on the idea that men don’t enjoy shopping and that all menswear would eventually be sold online. Since then, however, the company has opened close to 30 “guideshops” nationwide where shoppers can try on clothes to help them decide what to buy. Bonobos has expanded its partnerships with other retailers, and recently said it plans to open 100 stores of its own by 2020.
Wal-Mart/Jet's interest in these e-commerce upstarts seems clear: they are appealing brands with customer bases distinct from Wal-Mart’s own. Wal-Mart has long been challenged by the constraints of staying true to its lower-income customer base and expanding its appeal. The Jet deal, as well as the more recent acquisitions, could help attract higher-income shoppers and push beyond the top of its addressable market.
“To move Wal-Mart upmarket is a Herculean task,” retail futurist Doug Stephens, author of the forthcoming book “Reengineering Retail: The Future of Selling in a Post-Digital World,” told Retail Dive last year in the wake of the Wal-Mart/Jet deal. “Any time they do, they risk losing their most loyal customers. They’ve wound themselves in a corner by virtue of just how strong their brand essence is in the market. When you say ‘Wal-Mart,’ it brings up such clear connotations. For some people it’s what they want, and for some they want nothing to do with it. Buying Jet.com is an attempt to break free from Wal-Mart’s customer base.”
But acquiring Jet — and now these other sites — is hardly Wal-Mart’s first attempt at widening its appeal to deeper-pocketed customers. Eight years ago, the retailer launched “Project Impact,” an effort to improve the quality of its apparel and home furnishings, clean up stores and present friendlier customer service. It was widely seen as a disaster. Before that, Wal-Mart placed ads in Vogue magazine in 2005 and sponsored a New York City fashion show to highlight new, higher-priced apparel lines. The result? Another disaster, another retreat.
Wal-Mart could be hoping to avoid such pitfalls by positioning Jet as an alternative that will appeal to a different customer bracket. Acquisitions like Modcloth and Shoebuy are the speediest and easiest way for Wal-Mart and Jet to reach their goals, according to Profitero VP of Strategy and Insights Keith Anderson.
