LAS VEGAS — Walmart may have hit a financial road bump with its fourth quarter financial results, but the course has not changed — the company remains committed to operating both Walmart and Jet.com separately to appeal to different shoppers, and will continue to buy brands to reach its goals.
Marc Lore, president and CEO of Walmart e-commerce and Andy Dunn, founder and CEO of Bonobos and senior vice president of digital consumer brands took the stage at Shoptalk on Tuesday to assure industry watchers that Walmart is committed to operating both Jet and Walmart.com as different business units.
In the 18 months since Lore joined Walmart after selling his company, Jet.com, to the retailer for $3.3 billion, e-commerce sales sky-rocketed. In the first three quarters of the last fiscal year, digital sales rose 63%, 60% and 50%, sequentially. But fourth-quarter results stalled comparatively, increasing just 23% and spurring a 10% drop in the company's stock price in just one day.
"That Q4 was largely planned," Lore said. "We told The Street what we'd do in the quarter, and that was exactly what we did. We never give quarterly guidance and we didn't this time. We felt that reiterating 40% growth in the next year was enough, it obviously wasn't. We have 40% growth planned this year."
E-commerce at the company is on track to do just that.
"We're going to keep doing what we're doing," he said. That includes free two-day shipping "with no membership fee," Lore said in a subtle dig to Walmart's biggest competitor, the addition of roughly 1,000 more in-store pickup locations to the 1,200 already in place and the rollout of same-day delivery to 100 metropolitan markets by the end of this year.
The honeymoon may be over in terms of those high financial leaps, as Shoptalk moderator and Recode Senior Editor Jason Del Rey joked, but a question mark remains over whether the pairing of Lore and Walmart remains a sound one.
According to Lore, it does. "Will you be here a year from now representing Walmart," asked Del Rey. "I absolutely will," Lore answered. "It's still early days, it's only been 18 months now since the acquisition."
Expect even more acquisitions by Walmart, said Lore: "We're looking and talking to more companies right now than we ever have. We're open and we're looking for the right opportunities."
Many of those brands, particularly those that appeal to younger shoppers, will continue to be housed under the Jet banner, said Dunn, putting to rest speculation that the plan to differentiate Jet and Walmart may be coming to an end.
"Digitally native brands will really help to make Jet a more extensive property," said Dunn, who told attendees to expect these brands, and any developed by Dunn to end up on Jet. "The way we're thinking about Jet is around this urban millennial customer, and we're using these brands to enhance the appeal with [that customer]. We will be opportunistic about acquiring brands in other categories and [some] we'll build ourselves."
Like the Allswell home goods line unveiled in February. It began with a mattress, said Dunn, which revealed an opportunity to create an entire home line around that product. Allswell is a stand-alone brand effort that lives under the Walmart banner, positioned for wider appeal than Jet's stated millennial customer. The Walmart brand performs better in middle America than Jet, noted Lore. "So now we're directing Jet marketing into urban areas."
The goal has been, and continues to be, to keep the brands autonomous, to differentiate Walmart's online business from Amazon's, and to keep Jet innovative and nimble, like the startup it was.
It's the same message Lore delivered at Shop.org in September, saying that the goal is to keep things nimble like a startup. "Not a lot has changed in terms of how we're operating — it [still] feels like a startup right now," he said in September. "We share a common set of core values and built a foundation of trust early on. In order to run as fast as we're running, the team has to be empowered. You can't do that without trust."
