Why is Walmart Buying eCommerce Retailers at a Record Clip?

Why is Walmart Buying eCommerce Retailers at a Record Clip?

Minutes after the news leaked that Walmart had acquired Moosejaw, a quirky outdoor retailer in the Midwest with ten stores and known for their online presence, I got a call from a reporter who was trying to get a jump on the story. She asked me one simple question: Why is Walmart trying to buy market share with their eCommerce acquisitions? I told her she was thinking about it the wrong way. Walmart was not trying to buy market share. That’s too expensive and not efficient. Rather, they were buying capabilities that they could leverage across their portfolio and scale up faster.

 

In recent months, Walmart has purchased four eCommerce retailers. Walmart closed its Jet.com (a leading marketplace platform with a focus on urban millennials) acquisition in September 2016. With it came Hayneedle (a leading online retailer of home decor and furnishings) that was already owned by Jet. Then in January 2017 Jet acquired ShoeBuy, a leading online footwear etailer. Finally, in mid-February Walmart acquired Moosejaw which specializes in sporting goods and outdoors. By my estimation, that’s three more eCommerce retailers acquired in 5 months than in the first 50 years combined (Walmart fully acquired Yihaodian in China in 2015 and then sold it to rival JD.com in exchange for a stake in JD.com)

 

Walmart is thus investing heavily in eCommerce, but my opinion is that it is more of a capability play rather than a market share play. Consider the following benefits of these acquisitions:

People:

While these are not exactly acqui-hires, they do give Walmart deep category expertise in areas they did not already have. Walmart has a long history of moving merchants across many different categories to give them broad experience. The result is that they sometimes don’t have deep category expertise. These acquisitions help them build talent density in categories where they need deep expertise to compete against specialty retailers. If this expertise allows Walmart to scale across all platforms, there will be a benefit. For example, the rumor is that the online merchandising organizations will eventually be aligned based on the category leaders. For example, the ShoeBuy team will manage all of Footwear across ShoeBuy, walmart.com, jet.com. Hayneedle will manage all of Home. And Moosejaw will manage all of Outdoor Apparel.

Customers:

Walmart tends to be successful with a slightly older population in rural/suburban areas on the lower end of the socio-economic spectrum. Jet.com, for example, plays well towards Millennials especially located in urban markets.

Suppliers:

Walmart proper doesn’t sell the widest assortment of specialty products, so acquiring retailers with supplier relationships in those categories (e.g. broadly across home, footwear, outdoors) will give Walmart inroads with suppliers who might not have otherwise sold to them. This is important as Walmart aims to win in specialty categories where traditionally they only carried basic products. Not every item from every new acquisition will appear equally on all channels, but there are synergies across the platforms, potentially in unexpected directions.

Technology:

Each site that Walmart has acquired comes with unique technology that the other sites can benefit. Examples include:

Jet.com Smart Cart Pricing: Jet.com is famous for having smart cart technology that gives customers savings the more they buy (or remove options for returns which are expensive or pay with a debit card, so there are no swipe fees) which expands the basket. Increasing the number of items in the basket is key to driving both revenue growth as well as overall profitability (spreading out relatively fixed shipping costs across a larger transaction).  Walmart intends to maintain separate front ends for the customer but should expand smart cart pricing to other sites.

 

Moosejaw 360 Spin of Images:  Content is king on eCommerce sites. It helps customers find the right products as well as feel comfortable about what they are looking at so they actually make the purchase (i.e. convert). Giving a customer a comprehensive look at the product from all angles is one way to make them feel comfortable enough to make the purchase. The 360 spin feature on Moosejaw allows customers to spin the product around to see it from all angles. It is the eCommerce proxy for turning a shoe around in your hand to see it from every angle.

 

Moosejaw Side-by-Side Product Comparison: many other websites have this feature. This allows customers to put items next to each other and compare features to ensure that they are getting the exact right item they are looking for. This highlights the critical need for manufacturers to be populating and updating all types of content on their item pages. Meaning just copying and pasting a description is no longer good enough when customers are looking at individual attributes.

 

ShoeBuy improved shopping filters: When customers search for products on internet sites, they often type in a generic keyword that gets they close to what they are looking for. Then, they rely on the Left Hand Navigation (LHN) filters to narrow down on exactly what they are looking for. Shoebuy has excellent examples of filters to help the customer narrow down on exactly what they want.

 

 

All of these technology enhancements are designed to streamline the shopping experience:

  • Smart Cart Pricing: Gives customers confidence that they are getting the best value.
  • 360 Spin: Gives customers all of the content they need to fully understand what they are looking at.
  • Side By Side: Gives customers the ability to compare attributes across related products.
  • Left Hand Navigation: Gives customers the ability to filter by their desired decision variables.

 

It puts the power in Customers’ hands, so they get the information they want and need to buy in eCommerce. Many of these benefits are designed to optimize the content on the product detail pages, so Customers have information. Content is king, just ask your eCommerce buyer. Walmart is making major bets in eCommerce, many of which are designed to optimize the customer experience regarding content.

 

If you are not optimizing your content on your eCommerce site, it is probably time to take another look at your business. What worked in Brick & Mortar doesn’t work in eCommerce. Contact Content Analytics if you want us to give you an assessment of your content on retailer eCommerce sites. Just tell us your brand, and for which site you want an audit, and we’ll send you a customized Content Health Audit & Report at no charge.

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