Walmart might be feeling some buyer’s remorse over the $3+ billion it has spent to expand its e-commerce footprint in recent years.
A handful of recent headlines suggest Walmart acquisitions including Jet.com (bought for $3.3 billion in 2016), Bonobos ($310 million in 2017), and ModCloth (around $50 million also in 2017) became itchy tags it couldn’t ignore. To recap:
- Last Friday, brand investment group Go Global Retail said it would acquire ModCloth’s assets from Walmart for an undisclosed amount.
- Then on Monday, the WSJ reported that Bonobos is laying off a few dozen of its roughly 600 employees to cut costs.
- Earlier this year, Walmart merged Jet.com’s remaining staff with its own team after eliminating Jet.com’s leadership positions.
- All the while, Walmart has been seeking outside investors for Jetblack, the unprofitable personal styling offshoot of Jet.com. The WSJ estimated earlier this year Jetblack was losing $15,000 per member per year.
What once felt right is now very wrong
Walmart U.S. e-commerce CEO Marc Lore hoped big e-comm additions could a) make Walmart more competitive with Amazon and b) well, there is no b.
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But the acquisitions haven’t delivered. Walmart is expected to lose $1+ billion on its U.S. e-commerce business this year, Recode reports.
E-comm makes up 5% of Walmart’s total U.S. business, but most e-commerce growth is attributed to its grocery arm. So to get its online fashion segment back on the rack, it’s hoping cost-cutting measures like offloading unprofitable brands and axing staff are as good as hitting rewind.
Date: October 10, 2019
Source: Morning Brew