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The evolution of Walmart? Supply chain lessons for retailers when it comes to ecommerce acquisition

 

Guy Courtin, GT Nexus

We have previously looked at supply chain challenges for retail but one area of discussions at the moment is how do you extend your business to compete with always-on world of ecommerce? For one retail giant, the answer appears to be “if you can’t beat ’em, join ’em.” Or buy them, at least.

The latest rumours have Walmart in advanced talks to acquire Bonobos, the well-loved fashion brand that built its reputation on stylish men’s essentials. An industry pioneer, Bonobos has carved out a niche in the retail and fashion space, both through its catalog, ecommerce site, and boutique stores.

Bonobos’ stores are a prime example of how brick and mortar retail is shifting. While you can purchase some products in-store, the space is really used to provide experiences for the customer, immersing shoppers in the brand’s curated world view and easing the anxiety that often comes with making sure the clothes you buy online actually fit. From the variety of items on display to the personalized service the staff provides in guiding customers through the buying process, the experience is what sets Bonobos stores apart.

Coupled with traditional retail practices such as colourful, magazine style catalogues, a robust ecommerce site, and aggressive email marketing efforts, it’s the model of the modern retail experience. And it makes Bonobos an intriguing target for Walmart.

Walmart is well known for its always low prices, its robust supply chain, and its disciplined approach to supplier relations. So why would the world’s largest retailer want to change?

Walmart has long attempted to build out its own ecommerce footprint. Despite those efforts, it’s still perceived as something of an also-ran against some of the internet-first retail giants in terms of products, services, and user experience. All of which depend on supply chain.

One could consider Walmart’s 2016 purchase of Jet.com as a sign the company finally recognised its shortcomings in that space. The Jet.com model is an interesting one, in part because it allows the consumer to adjust the price of products either by bundling higher quantities or varieties of products into one order, or opting into- or out of a variety of associated services.

For instance, customers can determine shipping costs based on how quickly they want to receive a product, they can forego the option of free returns, and prices generally drop with each item added to a single order. Tied into the vast network Walmart already has with major players in consumer products, it may prove to a long-term winner for the Bentonville firm.

Adding other ecommerce players such as ModCloth, Moosejaw, ShoeBuy, and now potentially Bonobos, seems to signify Walmart recognizes its current business model needs to evolve in order to compete in today’s retail environment.

But this strategy also has Walmart walking a fine line. For instance, Bonobos and ModCloth built their brands largely by being what big box retailers are not. Their value is not derived solely through products, but also the experience they’ve been able to create. As men become more attuned to their styles and grooming needs (just look at the rise of men’s shaving services), or women look for authentic clothes for any body type, retailers will need to address and target these segments in a much more precise manner. That will shift supply chains.

There’s a reason consumers flock to these emerging brands – retail is no longer a one-size-fits-all industry.

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