Walmart to Buy Bonobos, Men’s Wear Company, for $310M
nytimes.com
nytimes.com
It is targeted directly at competing more effectively with Amazon. I don’t believe either company is worried about dilution of their respective brands.
What Walmart needs is to keep leveraging its existing strengths — logistics and supply chain, as well as immense amounts of capital — while invigorating its online retail division so that over the next 20 years, they can appeal and sell to their target demographics (which is what millenials will become) with the same stickiness that Amazon does.
Bonobos is popular among young male professionals that are relatively fashion-conscious. There are many workplaces in New York where the majority of new grads and millenials buy most of their wardrobe from Bonobos. The key — Bonobos is often the first place they look at. Andy Dunn has demonstrated he knows how to build a business that’s both sticky and appealing.
He’s joining an online retail division headed by Marc Lore, and a Walmart that is shifting gears to face the Amazon behemoth.
Purchasing Bonobos is part of their strategy of capturing audiences and market-share in the short-term, and of building a portfolio of brands that they can continue to expand for the long-term.
Bonobos (as well as other recent acquisitions), and Jet.com, which Walmart acquired August 2016, are brands that were born online and grew online. These acquisitions mean people like Marc Lore and Andy Dunn, well-versed in the art of courting a customer base through primarily-online channels, are now at Walmart. And I foresee this trend continuing as Walmart’s ship slowly but steadily steers towards the age of online retail.
Still a smart move as it lets Walmart snag some mid-america market share from Gap/Banana Republic/Old Navy (the last makes most of the money anyway).
> “Assortment is driving a lot of these acquisitions,” Wal-Mart Chief Executive Doug McMillon told investors last month before the ModCloth acquisition became public. “There are some suppliers that don’t want to sell on Wal-Mart.”
To me, that sounds like a plan to make Bonobos (or Moosejaw) a Wal-Mart company rather than to apply Wal-Mart's expertise to the acquired company.
[1]: https://www.wsj.com/articles/wal-mart-in-talks-with-bonobos-...
Personally, I'm still happy with my Bonobos products but I'll use this as motivation to start supporting another retailer.
Perhaps, but I can't think of brand images that are more diametrically opposed than Bonobos and Wal-Mart, in a business where image is everything.
Other reports have said Walmart is seeking to move upmarket, because lower end consumers have no money to spend, with expenses like food and rent dominating their budgets...I think this is the motivation for this acquisition.
Also, Walmart is trying to get more into online business and Amazon is getting into brick and mortar stores to marginalize walmart and target even more. Interesting.
I get the feeling Walmart is desperate to compete and will buy anything these days when all they really need to do is build a Web site that is easily navigable and works. You think a company with their resources could afford the talent required to build a site like AMZN has.
They have Walmart Labs [1], which to your point, doesn't seem to have the ability for whatever reason (don't discount the talent, its entirely possible that the bureaucracy in Bentonville, AR is holding them back).
How many designers and engineers who have the choice between Apple, Google, Facebook, Airbnb, Uber, Lyft....or literally any other company...would choose Walmart? The company known for using the United States welfare program as supplemental income for their hordes of low-wage employees?
Their brand image is a big turn-off for the upper-middle class yuppies who make up the majority of tech talent. They would be smart to lean much heavier on the jet.com brand in the future when it comes to recruiting.
I like to think that too, but a lot of it is all talk. I used to work with this dude in Boulder who was really into virtue signaling. Did all the right Boulder things, shopped at the right Boulder places, drove the Boulder car that showed you "cared", but just couldn't give up that cheap Walmart cell phone coverage. His attitude was "well it's a dirty secret no one has to know", which coincidentally(?) sums up Boulder fairly tidily.
Is Boulder known to have dirty secrets?
Straight Talk
> Is Boulder known to have dirty secrets?
Yes, the best kept one being that it's overblown with NIMBYism. It's residents like to think it's on par with places like Seattle in terms of social progress, but it's all talk and no one seems willing to write the checks. It's very pretty though!
If their upper management has any smarts, they have to know all the connotations and baggage that go along with the name Walmart. I don't think it's a brand they can hang on to forever.
I.e. that they've both been around long enough that their management is staffed with people who owe their live to the company, and therefore have a very different perspective on it than anyone outside the company.
Feed enough corporate rah rah and keep knowledge workers from seeing any of their low level employees, and I imagine it would start to look pretty good.
I wish you the best of luck. Not just for your job, but for Walmart. The world needs competition.
They are doing just that. Have had a couple of contacts from them, and always as jet.com (with a throwaway line in the second paragraph about their exciting recent acquisition by Walmart).
* Owned by Walmart
Well, Walmart is quite well resourced, has a lot of talented folks, the facilities (for engineers) are enticing, they offer the opportunity to work on stuff with huge scale, and the pay is relatively comparable.
What more do you want?
Walmart is a different experience in the places where there isn't social stigma attached to it because normal people don't have any problem going there, but also because there isn't a political apparatus working to deny their attempts to improve their buildings, expand to newer areas, etc.
Apple, Google, Facebook, Airbnb, Uber, Lyft, etc. etc. offer all of these things as well.
The only way for Walmart to win the talent game would be by offering absurdly above-market pay packages or absurdly above-average work-life balance policies. Which I'm quite certain, given their corporate culture based around beating down costs and maximizing efficiency, will not sit well with the lifer-execs back at home base.
Good luck getting a talented engineer without either an Ivy League pedigree or a history of employment at AppAmaGooBookSoft hired at any of the trendy startups you've listed.
SV is a bubble, and there are good people outside of it.
BTW, we're hiring a mobile release engineer for our small Portland office if you're interested.
Fun fact: If you account t for cost of living, Wal-Mart does pay more than many others.
There's also many other perks from working at home base. Massive fitness center (Who else can can claim they have 3 pools), cheap Sam's Club memberships. Add in that you get to try all the cool things like most others do (Savings Catcher, Scan n' Go, Grocery Pickup) and you get a substantial boost to the value.
Also, supposedly the new museum is amazing, for what it's worth.
Probably some interesting engineering challenges to pursue there. Pretty sure there is also a significant chunk of engineers that aren't as concerned about their approach to low-wage management. Amazon seems to have survived that challenge just fine.
Is it really so difficult to imagine that the value of clothes is relative?
Bonobos sells itself as an affordable yet fashion-forward brand, so perhaps you're just not the target consumer?
I end up buying more expensive shirts just because I don't feel as bad about having to have them altered. My arms are really long and my neck/shoulders are really broad relative to my height, so even slim or "extreme slim" dress shirts have a tendency to billow out of my pants unless I have them taken in, and I always have to have the arms slimmed significantly as well. When you spend that kind of money to have the clothing altered, you might as well spend a little extra to alter nicer clothing.
I don't know about US, but in Spain you can get a tailor made shirt for 100$.
If you don't see the value in clothes I don't see why you're making value judgements. A similar analogy would be "Chipotles is super expensive, you can get the same thing for much cheaper at Applebees with a coupon", missing the point that Chipotle is competing with restaurants that are far more expensive.
Tangential to your point, but you seem to have reversed “Chipotle” and “Applebees” here.
They had show- and fitting-rooms, but you had to then order the stuff (could be done in the showroom) and wait for delivery... in the US only. They said they were barred from shipping to the EU because someone else had the trademark there.
Not sure what became of their quality but I bought two pair about five years ago, loved one and the other was meh... and then they discontinued the style of the one I liked before I could order another pair. :-(
Walmart was definitely not the image they were going for originally, IIRC the founders were Stanford kids.
This was my thought too, you could go into the brick and mortar Bonobos store(Guideshops) and get a fitting, a consultation and they would offer you local craft beer. This seems like the antithesis of "one stop shopping."
http://business.time.com/2010/05/18/bonobos-very-fit-to-lead...
Who can read that article and tell me we're not in a bubble? The whole piece reads like a parody from Silicon Valley.
AG chinos are undeniable proof of a higher power... they are incredible pants and worth every penny.
But the material is a bit thinner and doesn't hold up as well as raw denim. However, raw denim is a bit more of an investment. It takes 2 weeks of constant wear for raw denim to feel "right", and you're supposed to buy undersized and let them stretch to your body. Once you do that, they're really nice. However, before that happens, it's like wearing a lower body straitjacket.
[1] http://www.retaildive.com/news/report-bonobos-raising-100m-t...
I know long haul for everybody, esp Andy. Looks like money raised is less than purchase price, so is there some meat on the bone in this acquisition?
This is all speculation: Perhaps it's part of some sort of internal coup within Bonobos, where Andy wasn't happy with some internal board/finance shenanigans. By taking a lesser valuation but moving into a big position within Walmart (likely with huge bonuses), he could end up getting reimbursed at a level disproportionate to his equity at Bonobos.
Just look at the list of acquisitions here: https://www.crunchbase.com/organization/walmart/acquisitions
> Partnering with Walmart — the biggest bricks-and-mortar retailer around — might have seemed extremely off brand for Bonobos.
YES it is. And "I think Walmart is misunderstood in some ways." isn't an explanation. Bonobos and Walmart are totally different in my mind, I can't imagine I'm the only Bonobos customer disappointed by this change.
Honestly, the $100 pants (from a few brands) I've worn don't feel any better (or last much longer) than $40-50 Uniqlo pants. I've always been curious about this market niche (better than fast fashion, but not designer quality).
This comment is more to point out to the OP that while Walmart might have bought Bonobos, it doesn't mean he's gonna go shopping at the actual Walmart building.
Is selling most of your stock during sales profitable? If so, interesting business practice and I'm curious if it's more common than I thought (J. Crew could be doing the same).
In fact, as JC Penney proved to consumers, you often make more money setting prices at $50 and having frequent sales at $30 than you do setting the price at $30 but having no sales.
I think they probably can lean on Walmart to lower their production costs and possibly cut their prices to offer Walmart customers an option that is above their typical retail choices.
Does anyone really think anyone else gives a shit how much someone spent on a shirt? or what their pants cost. Zuck shows up in sweat pants and t-shirt to work. He probably has never spent $100 on a dress shirt in his life.
But I agree. You can find clothes that fit well for very cheap. If you're associating with people that care how much you spent on your clothes, you should maybe consider associating with other people.
If you're even moderately muscular and don't want to look like you're wearing a tent, it's very difficult to buy clothes that fit well. For example, my waist is a 35-36 but I mostly have to buy 38 or 40 in waist jeans to fit my butt because of squats and deads. I mostly buy from Tommy Bahama for that reason.
> For $20 bucks you can get an nice dress shirt from Costco.
That is not at all comparable unless you happen to be shaped like a Costco shirt-rack.
The price doesn't matter as much as the styling, not even close.
I tend to know exactly what I want, and don't have the inclination to scour the discount racks in case they have exactly what I want. And if it's not exactly what I want, I usually end up not wearing it,, which is an even bigger waste.
"It's Brunello Cucinelli. I know this because I worked in the store he shopped in. They are $400 t-shirts and those sweatshirts are Brunello as well and are around $3,000."
"Mark Zuckerberg wears custom made Brunello Cucinelli tees in marl grey. I believe they run long for him, thus needing a hem. He chooses to order in bulk for an estimated cost per unit that varies from $300-$400. Price reflects on an order of plain custom tees vs. one of grey tees that feature the original 3 emblem Facebook insignia on the upper left chest."
the perception here seems to be that Wal Mart only sells stuff that 'people of Wal Mart' want to buy
there's is probably plenty of room in Wal Marts brand to get at - 'we sell everything, down market stuff and up market stuff'
--------
wal mart's impact on Main Street - while (somewhat) real - is a separate question
The only way that has a chance of working is if they never let this brand touch one of their stores or their logo. Otherwise the association will wash away any kind of cachet the brand originally had.
In short, their pants just make your butt look good.
One is for offense, the other is for defense.
Goes to show that the future is Amazon and not Walmart.
I wouldn't be so sure of that. In our tech circle, Amazon is indeed the darling and we love to hate on Walmart. However the latter is definitely skilled at logistics and supply chain optimization. Walmart is skilled in cut-throat margin markets, with the power to shift the upstream supply in order to meet its own goals. They are also better positioned to serve a wider demographic than just the upper middle class.
Granted, so is Amazon.
Seriously, Amazon comes in for more than its fair share of (often deserved) hate here on HN.
It makes more in profits per year than AMZN probably has it's entire history.
And I certainly think it's gonna be a lot harder for AMZN to replicate WMT's network of retail stores (which double up as warehouses) than it would be for WMT to replicate any of AMZN's online efforts.
In addition, by being a "retailer" WMT also avoids getting into competitive fights with the likes of Apple, Google and Microsoft, all major platform owners, and can instead better partner with them.
One is for $13.7B, the other $0.3B.
Is this the time for another fork of spree/solidus?
The project won't cease to see improvement in the open source version. Hell, we have a large team dedicated to open source for stuff exactly like this.
It's very hard to make e-commerce work. E-commerce is checkered with failure.
Not sure why they'd acquire a hybrid high-end retailer along with a bunch of other strange e-commerce firms. They seem to be focused on apparel -- may be some plan for apparel?!