It’s no secret that Wal-Mart is looking to expand their e-commerce footprint drastically. Since the acquisition of Jet.com and hiring of new CEO and president of Wal-Mart e-commerce, a Bonobos deal would be the fourth acquisition of online retailers.
From 2015 to 2016 Wal-Mart experienced a big decline in online sales. The company’s online sales only account for 3% of total sales, but they aim to achieve online sales growth of 20 to 30% by the second half of the year with their expansion.
They know they had to do something to take on Amazon. It makes sense that they need to expand online, but to some the acquisitions doesn’t seem to have the desired effect Wal-Mart might have hoped for..
While there seem to be many reasons why that is, the biggest reason is seemingly sacrificing of brand identities. What will happen to the ModCloth brand, renowned for it’s diverse and inclusive approach to fashion?
Being a unique brand that caters to every shape and size is likely to drown in an ocean of other brands.
And, although yet to be confirmed – what about Bonobos? A high-end perceived hipsterific brand for men, specialising in tailoring suits and shirts for men. Will they still have the same desired brand reputation if they’re sold through Wal-Mart’s website?
As the comments on a Bonobos Facebook post above demonstrates, customers are not happy with the rumoured acquisition and what it will do to the brand.
ModCloth currently have one bricks and mortar store in Austin, Texas, and since 2015 a lot of money have gone into redesigning and experimenting with that. Before opening the store, they went on a “fit shop” tour to experiment with bricks and mortar, but in the end this has been one of the bigger contributing factors to the company’s financial problems.
So it seems like, as soon as Wal-Mart showed their interest, ModCloth didn’t have to think twice about selling.
In a Facebook post, founder of ModCloth, Gregg Koger, wrote:
“…To those who are calling me a “sell out”, or worse, please know this: I’m not making any profit on this sale. I haven’t had a controlling stake in the business for years. And this was the only way forward that allowed ModCloth to continue to exist. Trust me, it’s a good thing.”
However, customers and previous employees seem to disagree. Maybe there could have been another way of saving the brand? Anyway, that’s too late now.
An article Reuters wrote on the subject reads:
“Howard Davidowitz, chairman of retail consulting and investment banking firm Davidowitz & Associates Inc, said Wal-Mart’s prior efforts to buy market share through acquisitions have not succeeded. ‘They have been involved with this strategy for a long time. How has it done? Terribly,’ Davidowitz said. ‘Marc Lore has continued this strategy.’ Lore did not respond to a request for comment.”
I guess we are yet to see how the expansion will affect Wal-Mart’s online sales revenue, but from what we’ve seen – just because you can buy it doesn’t mean you should!
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