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.
You're saying in 20 years, the 50+ year old demographic will become relevant to mainstream retailers. What do you base this projected transformation upon?
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.
Check out the "malefashionadvice" subreddit about this deal. There is a huge, "I'm burning my Bonobos" backlash. Fashion is as much about image as anything, and I think it will be very difficult for Bonobos to make this transition into Walmart smoothly.
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.
Bonobos started out selling decent-looking business-casual type pants for "normal-sized" guys, i.e. those of us who would not fit in the skinny pants that were becoming the rage.
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.
Bonobos is super expensive. I don't know how folks can afford to shop there. It would kill me to spend $300 on 3 dress shirts when I can get the Kirkland Brand for a fraction of the price. Even their sweat shorts are $80 and the Nikes I have were $15 on sale. The cheapest you can get a pair of jeans for is $100, Eddie Bauer has really nice jeans for half of that when they are on sale.
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.
I feel like walmart through no fault of their own has a bad brand in certain groups and would be well served by creating some sort of alternate brand to umbrella its acquisitions. Some people look down on those who shop there and in order to target those negative often times web savvy people they should create a child brand.
Walmart is plenty at fault for their brand's image. Until very recently, they've been on a trend of pushing workers harder, driving suppliers to produce shoddier and shoddier products, lying about potential jobs to get small towns to subsidize building stores that run local companies out of business, then moving those stores to new locations and refusing to let competition lease the empty building they left behind, intentionally screwing around with employee schedules to make it hard for them to keep the second job that they need, making life miserable for long-time workers so they can avoid paying more than entry-level wages... the list can go on. Walmart has no one but itself to blame for its image.
I heard of Bonobos quite a while back but never handled a pair of their chinos until about a year ago while shopping at Nordstrom. They certainly hit a price point for people that would get sticker shock from some brand like Adriano Goldschmied, but the quality of the pants is a bit out of line even for $90... so I guess there is a bit of irony in Walmart buying them :)
That's too bad. I've heard a lot about them, but never tried on a pair. However, I do have a pair of AG chinos that I bought on sale and they fit like heaven.
Yeah I felt them at Nordstroms and thought the Nordstrom in house brand was much better quality. Then again Bonobos is probably more fashion forward wrt the cut and style.
That multiple doesn't seem crazy for a relatively early stage ecommerce startup. But, I'm guessing the acquisition price was based more on Bonobos' private valuation. Bonobos has raised ~$125 million so a $310 million valuation would be reasonable.
Looks like an acquihire. Andy seems to be getting a pretty decent position within the upper management of the ecommerce division at Walmart.
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.
Walmart Labs, their e-commerce division has been on an acquisition frenzy for a while now. I recently interviewed there for a role that was directly involved with the M&A activities regarding technology and infosec.
WHY? I've bought most of my clothing from Bonobos for the last few years, I guess I'll look elsewhere now.
> 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.
Is it though? I've found Bonobos to be of mediocre quality and boring design which doesn't call for the price point they are at. For $125 you can start getting some really nice shirts from other brands (Saturdays NYC, La Paz, etc).
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.
> But for now, there are no plans to offer Bonobos’s $98 chinos or $128 dress shirts in Walmart’s 5,000-plus stores. Instead, Walmart is hoping to learn from Bonobos. Its co-founder and chief executive, Andy Dunn, will oversee Walmart’s digital brands, which also include the independent women’s brand ModCloth.
If i recall lore and/or Mcmillon said they are going to become experts in the product and online merchandising in Wal-Mart's various departments. Like apparel, sporting goods, housewares & domestics, pets, jewelry, auto, craft & celebration, gaming. To be the best at knowing at the product level.
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.
For those who have never heard of bonobos, their pants fit exceptionally well. Andy & co focused on doing one thing, having quality pants that fit really well. The fit of the clothing matters more than anything about bonobos and it is where most brands screw up.
Do you mean they fit you really well, or that they go out of their way to provide a big variety of styles, cuts, and sizes so that they potentially fit anyone really well?
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.
I like Walmart and I think they're in a very strong position to compete with Amazon. Hopefully acquisitions like this one indicate that they recognize the "disruptive" nature of ecommerce on their traditional business, which necessitates a separation so that the bigger business unit does not accidentally crush the smaller business unit.
This is going to be a disaster. They are anti-Walmart. Walmart needs to stay true to its vision of low price, high quality. Bonobos is high price, high end. "But for now, there are no plans to offer Bonobos’s $98 chinos or $128 dress shirts in Walmart’s 5,000-plus stores. Instead, Walmart is hoping to learn from Bonobos." Anytime you spend $310 million "hoping to learn"...you have no idea what your plan is and that means you fail when you're in e-commerce and aren't focused.
Also what I see interesting with Walmart is that they are pushing towards blockchain. If they actually continue in this path. It would beat the shiz out of Amazon.
[+] [-] alangou|8 years ago|reply
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.
[+] [-] rch|8 years ago|reply
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).
[+] [-] CodeWriter23|8 years ago|reply
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.
[+] [-] hn_throwaway_99|8 years ago|reply
[+] [-] yalogin|8 years ago|reply
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.
[+] [-] biztos|8 years ago|reply
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.
[+] [-] hourislate|8 years ago|reply
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.
[+] [-] leemailll|8 years ago|reply
[+] [-] wonderwonder|8 years ago|reply
[+] [-] skywhopper|8 years ago|reply
[+] [-] mmmpop|8 years ago|reply
[+] [-] xxSparkleSxx|8 years ago|reply
[+] [-] hkmurakami|8 years ago|reply
[+] [-] philfrasty|8 years ago|reply
[1] http://www.retaildive.com/news/report-bonobos-raising-100m-t...
[+] [-] snowman311|8 years ago|reply
https://www.crunchbase.com/organization/bonobos#/entity
[+] [-] jpeg_hero|8 years ago|reply
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?
[+] [-] opportune|8 years ago|reply
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.
[+] [-] 5706906c06c|8 years ago|reply
Just look at the list of acquisitions here: https://www.crunchbase.com/organization/walmart/acquisitions
[+] [-] egonschiele|8 years ago|reply
> 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.
[+] [-] fashionofftopic|8 years ago|reply
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.
[+] [-] joelrunyon|8 years ago|reply
[+] [-] frgtpsswrdlame|8 years ago|reply
[+] [-] sotojuan|8 years ago|reply
[+] [-] losteverything|8 years ago|reply
[+] [-] wonder_bread|8 years ago|reply
[+] [-] Chaebixi|8 years ago|reply
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.
[+] [-] tryitnow|8 years ago|reply
[+] [-] geori|8 years ago|reply
[+] [-] skywhopper|8 years ago|reply
[+] [-] cocktailpeanuts|8 years ago|reply
One is for offense, the other is for defense.
Goes to show that the future is Amazon and not Walmart.
[+] [-] athenot|8 years ago|reply
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.
[+] [-] cookiecaper|8 years ago|reply
[+] [-] surement|8 years ago|reply
One is for $13.7B, the other $0.3B.
[+] [-] MusaTheRedGuard|8 years ago|reply
[+] [-] champagnepapi|8 years ago|reply
[+] [-] _gfrc|8 years ago|reply
[+] [-] trondogdale|8 years ago|reply
[+] [-] tildedash|8 years ago|reply
Is this the time for another fork of spree/solidus?
[+] [-] theprop|8 years ago|reply
[+] [-] aisofteng|8 years ago|reply
[+] [-] kev009|8 years ago|reply
[+] [-] amauta|8 years ago|reply
[+] [-] amauta|8 years ago|reply
[+] [-] bamboozled|8 years ago|reply
[deleted]
[+] [-] sctb|8 years ago|reply
https://news.ycombinator.com/newsguidelines.html
[+] [-] JohnJamesRambo|8 years ago|reply
[+] [-] amauta|8 years ago|reply
[deleted]