With its $310 million cash takeover of men’s apparel basics company Bonobos, Walmart, as with its other recent e-commerce acquisitions, is buying into a customer base that is mostly alien to it: Less than 1% of Walmart buyers shop at Bonobos and they give Bonobos 0.04% of their online spend, according to NPD Group’s Checkout Tracking.
On the flip side, about 11% of Bonobos buyers shop at Walmart and give Walmart 0.2 % of their online spend, according to the research, which was emailed to Retail Dive. NPD Group's Checkout Tracking analyzes consumer purchases at the receipt level.
Bonobos has particularly high share of wallet for apparel and accessories compared with some key competitors, according to Checkout Tracking: With share approaching 34%, Bonobos outpaces Nordstrom (which invested in the brand and has some stores that sell Bonobos), Banana Republic, J.Crew and Amazon. But many of its fans criticized the brand on Facebook and in the comment section of a Medium post from Bonobos co-founder Andy Dunn, who will be joining Walmart’s e-commerce team.
In its quest for e-commerce growth, Walmart is pursuing a strategy that chases not just sales on a different channel but also consumers practically from a different planet.
Walmart's customer base is generally older and less wealthy than those shopping at Target and Amazon, and many of its add-ons, like check-cashing services at its stores, are aimed at lower-income shoppers. But the customers who frequent the brands that it has scooped up in recent months, including women’s apparel site Modcloth and, on Friday, Bonobos, are quite a bit younger and more spendthrift.
Those differences introduce a certain amount of tension, and Walmart and its new e-commerce sites may need to keep their distance from each other if the newer brands are to hold on to their higher-spending fans, according to Kelly-Jo Sands, EVP of marketing technology at marketing firm Ansira. “If you tie [them] too closely together, you might see a fanatic backlash, but you might also see expectations of the prices to come down.”
While Modcloth, which is less well established and struggling financially compared to Bonobos, has staked out territory with vintage-inspired styles and a particular approach to sizing, Bonobos has touted the fit of its basics clothing. That leaves an opening to any men's apparel upstart that offers such run-of-the-mill apparel, but that isn’t owned by Walmart. Bonobos fans flocked to the brand’s Facebook page after the takeover was announced on Friday to bemoan the move, and recommend to each other e-commerce players that could fill what many now perceive as a void. Judging from the Facebook comments, those include: Original Penguin, Huckberry, Jomers and United by Blue.
Bonobos attempted to smooth the ruffled feathers with responses in its Facebook comment section, and Dunn took to Medium to explain the action. “As a kid growing up in Chicago, I learned from my parents how the decisions we make affect our future,” he wrote, noting his mother’s hardworking immigrant status and his own big graduate school debt. Dunn also tried to position the sale to Walmart as Bonobos’s latest disruptive move. “Making better fitting pants. Really? Selling them on the internet. Really? Raising venture capital for a retail company. Really?,” he wrote. “Making clothing stores with no clothing to take home. Really? Selling to Walmart. Really?”
But most readers weren’t having it.
“This is such a shame because I love Bonobos clothing so much,” David Bridges replied to Dunn’s Medium post, reflecting some of the implications NPD Group’s data and of Sands’ observations. “I love the style and Bonobos pants are the first pants that I have purchased in my 30 years of life that actually fit me. But as someone who works hard and likes to purchase quality goods there is no way I will be able to purchase another piece of clothing from Bonobos. How can I justify buying a pair of ‘quality’ shorts for $78 knowing this money is going to profit Walmart? It’s a shame that companies are being consolidated under these giant corporations. The internet is the reason why a company like Bonobos can prosper. Now companies like Walmart are snapping up all these innovative companies because they are not creative enough to compete. It is hard to say no to that kind of money & the opportunity that comes along with it, but in the end you work for Walmart and that’s all there is to it.”