Here’s What Walmart’s CEO Looks For In a Takeover Target
If you thought Walmart’s (WMT) recent acquisitions of outdoor gear online retailer Moosejaw and online footwear store ShoeBuy were outliers in its e-commerce strategy, think again.
The massive retailer’s mergers and acquisitions tactics have been very much focused on helping it beef up its e-commerce sales by expanding the selection online and reaching new, non traditional Walmart customers.
The two deals came on the heels of Walmart’s $3 billion acquisition of jet.com last summer as well as a broad expansion of its third-party seller marketplaces. The result has been a re-acceleration of Walmart’s online sales as it looks to narrow the enormous gap with Amazon.com (AMEN). In its most recent quarter, Walmart’s online sales rose 29%; the pace had been in single-digits only a few quarters earlier.
The company’s website now offers some 35 million different kinds of items, a fraction of Amazon’s assortment, but more than four times what it had a year ago. And Wal-Mart Stores CEO Doug McMillon wants to keep building on that.
“Assortment is driving a lot of these acquisitions,” McMillon said at an investor conference in New York on Tuesday. He did not specifically say Walmart was in the market for more M&A opportunities.
Moosejaw and ShoeBuy are tiny retailers and will scarcely move the needle for Walmart on their own. But what they do give the retailer is exposure to new customers and new ways of presenting products as well as testing customer reactions. They in turn get access to far more customers thanks to Walmart’s enormous e-commerce firepower.
“Having multiple brands gives us the opportunity to make different choices,” McMillon said in explaining why Moosejaw, ShoeBuy and jet.com were all keeping their web sites, even as they are being integrated technologically in the background.
Jet.com brings in a younger, more affluent and more urban shopper, exactly the demographic McMillon has clearly said he wants more of. And in any event, some suppliers want to sell through jet.com and not walmart.com.
Walmart has also been seeking to better use its stores as an edge over Amazon. For instance, it recently upgraded its shopping app to allow pharmacy customers access to an express lane as part of its efforts to get more shoppers to use the app rather than Amazon’s and cultivate that habit.
The retailer reported a much better holiday quarter than rivals like Walmart (WMT). But McMillon said Walmart felt more urgency than ever to build on that. “It’s a faster cycle time than I can ever remember,” he said. “It’s only going to get faster.”