This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (October 24, 2017).
Marc Lore, the company's U.S. e-commerce chief, explains its
acquisition strategy
Wal-Mart Stores Inc. has been on a buying spree over the past
year, seeking to better position itself for an intensifying
e-commerce battle with Amazon.com Inc.
Leading the effort is Marc Lore, who became Wal-Mart's U.S.
e-commerce chief last year after the Bentonville, Ark.-based
retailer acquired his startup, Jet.com, for $3.3 billion.
Mr. Lore sat down with The Wall Street Journal's Jason Anders to
discuss the megaretailer's plans for e-commerce. Edited excerpts
follow:
Elevating the brand
MR. ANDERS: Wal-Mart recently acquired ShoeBuy, Bonobos,
ModCloth, Moosejaw and delivery company Parcel. But you aren't done
shopping, right? There's more to come?
MR. LORE: That's right. We're looking at a lot of different
things right now. Everything in every sector -- technology,
retailers, digitally native brands. We're looking a lot.
MR. ANDERS: The brands you bought are all established,
well-known names. What's the overall strategy? Do you plan to
integrate these things closely into Walmart.com or keep them as
their own brands?
MR. LORE: There are two different strategies that we are
pursuing simultaneously. The retail specialists such as ShoeBuy and
Moosejaw -- we bought those companies to really help us accelerate
in the long tail. They have an amazing assortment, amazing
relationships with brands. The teams are great, product content is
much better than what we had before. So being able to take that
product content and those relationships and bring that to
Walmart.com and Jet is really the reason to do it.
We've also empowered the leaders of these companies to basically
run the category across the entire entity. We didn't just buy them
and say, "Just keep doing what you're doing." Instead we told them,
"We want you to run and manage this category." It's worked out
really well.
MR. ANDERS: Do you want me, as a shopper, to feel like I'm
shopping at a Wal-Mart property? Or is it OK with you if I have no
idea that Wal-Mart has anything to do with Moosejaw?
MR LORE: Yeah, it's probably better that way, that you just know
that it's Moosejaw.
MR. ANDERS: Why is it better that way?
MR. LORE: Because people know the brand for being a specialist
in outdoor. I think a specialist positioning is better than a
mass-market one. But again, we aren't looking to drive tons of
traffic to these sites. It's really about how do we accelerate the
long tail and those product categories on Walmart.com and Jet.
MR. ANDERS: Are these types of brands helping to elevate
Wal-Mart overall, make it cooler?
MR. LORE: It's about bringing in a better, more unique,
specialist assortment to the site. We're working on a couple of
partnerships now that will be announced in the next few months to
help bring an even more premium assortment onto the site. We're
also redesigning the website, investing heavily in vertical
experiences in both home and fashion, to make it less about
transaction and more about browse and discovery. So yes, we're
definitely making a push to elevate the brand.
Importance of scale
MR. ANDERS: Wal-Mart is famous for paying attention to the
bottom line. Jet.com came up not having that same sort of
restraint. Can you do this in a way on Jet.com that is ultimately
profitable?
MR. LORE: Absolutely. E-commerce is a scale game. And the great
thing here is that we get to combine the scale of both Walmart.com
and Jet together on a common infrastructure. So it isn't looking at
each of them in isolation. We actually get the ability of each one
to leverage from the other.
MR. ANDERS: When do you think Jet.com will become
profitable?
MR. LORE: I haven't talked about profitability, although at the
analysts' meeting last week, I did say that this year would be the
peak in losses. We expect a slight reduction of losses next
year.
MR. ANDERS: When we polled audience members about which company
they think is going to dominate e-commerce in five years, they
didn't pick Wal-Mart.
MR. LORE: It will be interesting to ask that question 50 years
from now, or 20, because Wal-Mart has some really unique assets
that no one else has. To date, we haven't fully leveraged the scale
of Wal-Mart, specifically its 4,600 stores within 10 miles of 90%
of the population. Fresh, frozen, over 100,000 general-merchandise
SKUs are in that proximity.
That product gets there in full truckloads -- not cases and
pallets -- and those 4,600 warehouses are profitable. They're
already covering their entire fixed expense. So each marginal
dollar that ships out of there comes out at an incredible
profit.
Already, [customers can pick up online orders] of fresh grocery
at 1,000 stores. We're rolling that out to over 2,000 stores next
year. And from each of those stores, we will have the ability to
deliver. We are testing grocery deliveries now in 22 stores, using
a combination of our own associates, Uber drivers, Deliv, and a
bunch of other players.
MR. ANDERS: There is a big arms race under way right now with
groceries. Certainly, Amazon and Whole Foods are getting a lot of
attention. Up to now, Wal-Mart has been banking heavily on its vast
physical store network and making that better.
MR. LORE: The hard part is done. We have forward-deployed
inventory, full truckloads, warehouses making money. We have pickup
capability for online orders at 1,000 stores, which will be 2,000
stores by the end of next year and eventually 3,000 and 4,000
stores. Now, it's just about that last-mile delivery piece, and
there are plenty of partners we can work with to do that.
MR. ANDERS: Amazon has plowed a ton of money into the logistics
side. Are you saying that Wal-Mart can go head-to-head with Amazon
and offer the exact same services that they're offering?
MR. LORE: We have a little bit of a second-mover advantage. We
were able to build a logistics network from scratch. We've got the
warehouses in place at the right size, with the right amount of
automation. And today, we can hit 87% of the country overnight and
99% in two days, via ground shipping.
Over the next two years, you'll start to see dramatic
improvements. You'll see the new design rollout at Walmart.com.
You'll start to see more same-day and two-hour delivery. You're
going to see a lot of changes.
And I think two years from now, it will be interesting to ask
the same question to see how people think.
Write to reports@wsj.com
(END) Dow Jones Newswires
October 24, 2017 02:47 ET (06:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
Walmart (NYSE:WMT)
Historical Stock Chart
From Aug 2024 to Sep 2024
Walmart (NYSE:WMT)
Historical Stock Chart
From Sep 2023 to Sep 2024