Richard was recently quoted in a BloombergBusinessWeek story on Wal-mart’s re-positioned e-commerce strategy and the new leadership for these online efforts, headed up by Jet.com’s Marc Lore.
He’d like to extend Jet’s sensibility and business model to Walmart.com, the second-biggest e-commerce destination in the U.S., according to ComScore Inc. A site redesign is due this summer. (He’s thinking of recording another set of personalized introductions.) Lore also recently announced free delivery on Walmart.com for orders of more than $35, a Jet-like (and Amazon-like) tactic to give customers discounts for buying more stuff at once, so it can be shipped more efficiently in a single box. He also announced that shoppers will be able to save money on 1 million products if they order online and pick them up at one of the chain’s 4,700 U.S. stores, where it’s cheaper for the company to deliver.
Crowning the entire strategy is an acquisition spree: buying middling e-commerce startups such as Shoebuy.com ($70 million), fashion retailer ModCloth ($45 million), and outdoor apparel seller MooseJaw ($51 million); installing their founders as his deputies; and selling their products on Walmart.com, where the selection still lags far behind Amazon’s. Later this spring, Lore is also likely to announce Wal-Mart’s reported $300 million acquisition of Bonobos Inc., a decade-old menswear website that offers well-fitting pants and a team of enthusiastic customer service people—Bonobos calls them “ninjas”—that wouldn’t normally be associated with a giant like Wal-Mart.
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Lore was making the same risky bet that Bezos had years before. E-commerce businesses that start out looking frail can generate healthy amounts of cash if they make it past infancy. And though it wasn’t working yet, Lore argued that Jet’s “smart cart” system—which gives customers opportunities to save money when they buy multiple items at once or agree to a longer delivery time—would eventually entice a price-conscious swath of Middle America. “We weren’t seeing the benefits of it because we had not yet reached scale,” Lore says. “But the model was absolutely viable. I think the market is massive, and even a small share of a trillion-dollar [retail industry] is a pretty big business.”
In early 2016, with Jet churning through its new cash, one of the startup’s board members used that pitch on Wal-Mart, hoping to get Lore an introduction to McMillon. It worked, and Lore flew out for a meeting in Bentonville. What started out as a preliminary discussion about an investment in Jet flowered quickly into a corporate bromance. In June, McMillon visited Jet’s offices in Hoboken, wearing a brand-appropriate purple shirt. Lore says they spent considerable time at a whiteboard, sketching out a shared future: “We just sort of immediately saw eye to eye on what needed to be done.” It’s unclear if harps played in the background.
They both needed the partnership: McMillon to send up a flare for employees and investors about the importance of Wal-Mart’s online efforts, and Lore to pay off his backers and escape the fundraising circuit, where he’d spent about half his time over the previous two years. McMillon also came away with a handy pitch for Wal-Mart shareholders who might have blanched over the purchase price—that the company’s founder himself would have loved Jet.com. “The Jet concept of sharing savings with customers is a very Sam Walton-like idea,” says Richard Cook, co-manager of The Cook & Bynum Fund, which owns Wal-Mart stock. “You will help us lower costs, and we will share that savings with you.”
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