Walmart spending $310 million on Bonobos
Walmart is buying online men’s clothing retailer Bonobos for $310 million in cash, showing that its appetite for hip clothing brands is not abating as it looks for ways to gain on Amazon.
It’s a sign of the aggressive direction Walmart is taking since buying Jet.com last year and keeping that company’s founder as head of its online division. Walmart has since bought clothing seller ModCloth, footwear retailer ShoeBuy.com and outdoor gear seller Moosejaw as it focuses on brands appealing to younger shoppers.
Bonobos, founded 10 years ago in New York, began by selling simple chino pants on the Internet. It has expanded to offer shirts, suits and other
men’s clothing, and has opened dozens of brickand-mortar locations, as well as boutiques in Nordstrom department stores, a previous investor in the startup.
Yet even as Bonobos has become a more conventional retailer, it has maintained its online approach, offering generous shipping and return policies and calling its customer-service agents ninjas.
Buying Bonobos is a good move for Walmart as it tries to compete with Amazon, which has been quickly expanding its clothing business, said Internet consultant Sucharita Mulpuru-Kodal.
“If you roll up enough of these online startups, you create a meaningful share” of business, she said. She noted that Walmart can learn from Millennial customers.
While Walmart keeps trying to compete against Amazon by pushing harder online, Amazon announced a bold move into brickand-mortar stores Friday by saying it would buy Whole Foods in a deal valued at about $13.7 billion.
The Bonobos deal, announced Friday, is expected to close this summer. Bonobos CEO and founder Andy Dunn will report to Marc Lore, the CEO of Walmart’s U.S. online operations.
“Adding innovators like Andy will continue to help us shape the future of Walmart,” said Lore. “They’ve created an amazing product and customer experience, and that will not change.”
At Bonobos showrooms, called Guideshops, customers can try on pants, shirts, ties, belts and jackets with suggestions from stylists. They can order online at the store and have their clothes delivered to their homes or office a few days later. The company now operates more than 30 stores, and plans to have 100 by 2020.
For Bonobos, the acquisition by Walmart will help expand its business. But for now, there are no plans to offer Bonobos’ $98 chinos or $128 dress shirts in Walmart’s 5,000-plus stores.
Still, Mulpuru-Kodal said, it is a bit of “a game of Monopoly.”
“Walmart has huge coffers. Even if one of them shows promise, it pays for the rest,” she said.
Walmart’s online business is gaining momentum, but remains a distant second to Amazon. It increased 63 percent in the fiscal first quarter. That marked the fourth straight quarter of gains.
Under Lore’s direction, Walmart also has been working accelerate the integration between Walmart.com and Jet.com, and trying to take advantage of its scale in areas like shipping and sharing its products. Walmart is starting to offer discounts on thousands of online-only items when customers elect to have them shipped to one of the company’s stores for pickup.
Walmart has also created an incubator lab focused on projects in robotics, virtual and augmented reality, and artificial intelligence.