In its fight against Amazon, Walmart has once again stepped on the acquisition pedal: On Friday, the world’s largest retailer said it had bought online lingerie retailer Bare Necessities, following its purchase this month of online plus-size fashion retailer Eloquii.
Bare Necessities, founded in 1998, carries more than 100,000 units from more than 160 brands — from Calvin Klein underwear to Spanx shapewear — describing itself on its website as the largest online specialty retailer of intimate apparel. As retailers seek to meet an increased demand for plus-size apparel, Bare Necessities has an “unmatched size range” of bands that go up to 56 and cups that come as large as O, it said. In comparison, on the website of L Brands’ Victoria’s Secret, the size goes up to just 40 DDD.
However, you’d be mistaken if you thought Walmart’s motivation behind the acquisition was simply getting a bigger share of the online intimate apparel market as part of its growing fashion focus. Yes, some of the products on Bare Necessities, which will continue to run independently, can eventually expect to be featured on Jet.com, Walmart’s play for urban millennials, and on Walmart.com. (Just look at Moosejaw: In August, it became the first of Walmart’s acquired brands to curate and open an outdoor gear shop on the retail giant's namesake site.)
But the purchase of Bare Necessities is just as much about getting Walmart — a retailer that some upscale labels still hesitate to be associated with — the talent, knowhow and brand connections it needs to fast expand its online assortment in various categories to attract online shoppers seeking convenience and one-stop shopping.
In a familiar playbook that it has used with many of its other acquisitions — notably in having Jet.com’s co-founder Marc Lore lead its Walmart U.S. e-commerce business — Walmart said Noah Wrubel, Bare Necessities’ CEO and co-founder, will now lead the intimates category for both Walmart.com and Jet.com.
As
Walmart’s namesake U.S. unit, more than three-fifths of the company’s total business and the centerpiece behind the investment case for the stock, in August reported its best quarterly comparable sales in more than 10 years. Key to that growth wasn't just the traffic and average transaction growth, but the better-than-expected 40% jump in online sales, which have also played a central role in its brick-and-mortar store performance.
Walmart has doubled down on online ordering for grocery pickup and delivery and installed more pickup towers inside stores to capitalize on its nearly 4,800 U.S. stores, located within 10 miles of 90% of the U.S. population — a competitive advantage it repeatedly touts at a time when costly last-mile delivery is a big differentiator for retailers seeking to satisfy consumers’ fast-delivery demands.
Just watch Walmart's TV commercials these days, trumpeting online ordering for curbside pickup or delivery, and you’ll get where Walmart’s big strategic focus is. “Walmart’s omni-channel initiatives are contributing to comparable sales growth,” Walmart president and CEO Doug McMillon said in August.
However, as fast as Walmart is growing, Amazon isn’t about to let anybody threaten its sizable online lead either. And Walmart has a long way to go to catch up to Amazon.
While Walmart's share of the U.S. e-commerce market rose to 4.3% in 2017, from 2.9% in 2012, Amazon's online U.S. market share jumped to 46%, from 24%, during the same period, Euromonitor data has showed.
Separately, a Rakuten Intelligence study of online receipts from more than three million U.S. online shoppers found Walmart.com, including Jet.com, held a total market share of only 1.8% as of June 30, far shy of Amazon’s 34%. Its study didn't even capture data from Amazon Fresh purchases.
Traffic-wise, even though Hitwise data showed Walmart.com's growth in visits in August outpaced even Amazon's, total online visits to Amazon in the 12 months ended August topped 21.1 billion, more than four times Walmart.com’s 4.77 billion.
Jet.com’s traffic, meanwhile, slumped 52% in August ahead of its recent site relaunch, with Walmart seeking to use Jet.com to captivate urban areas like New York with high concentrations of affluent millennials that it hasn’t been able to penetrate. As part of the Jet.com facelift, another of Walmart’s marquee purchase, Bonobos, is now selling on Jet.com even as it’s still absent from the company’s namesake site.
Don't expect Walmart to lose its appetite for acquisitions anytime soon.
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