Walmart is building a new empire by gobbling up smaller brands and letting them live in a 'free' marketplace
- Walmart.com is transforming into a virtual mall.
- The retailer is buying ecommerce companies and instead of folding them into the Walmart brand, it's letting them operate independently.
- The strategy should help Walmart appeal to higher-income shoppers and better compete with Amazon.
Walmart.com is morphing into a virtual mall, and it's starting to look a lot like Amazon.
Now, Walmart is shifting its strategy. The company is building an online marketplace to house a variety of recently acquired brands that will largely maintain their independence from Walmart.
"Walmart is recognizing that to be successful in today's market, you're better off being a marketplace rather than an empire," Stephens said.
Walmart recently struck a deal to give the high-end department store chain Lord & Taylor space on its website. It has also been on an acquisition spree, snatching up ecommerce companies that appeal to higher-income customers like Jet, MooseJaw, ModCloth, Shoebuy, Bonobos, and Hayneedle.
Walmart ecommerce head Marc Lore explained the company's strategy of maintaining independence for these brands at a conference last month.
"Specialist positioning is better than mass," Lore said, according to TechCrunch. "We've empowered the leaders of these companies to basically run the category across the entire entity."
Walmart is preserving the independence of the brands it's acquiring at least in part to avoid alienating higher-income shoppers that might not otherwise shop at Walmart, said Ed Yruma, managing director at KeyBanc Capital Markets.
Internally, however, the brands will benefit from Walmart's cash flow, infrastructure, and relationships with suppliers.
"It doesn't need to be a Walmart box showing up on your doorstep," Yruma said, referring to shipments from one of Walmart's newly acquired ecommerce companies. "The important piece though is that Walmart is leveraging the infrastructure and costs of these businesses across that broader platform."