First Walmart purchased footwear e-tailer ShoeBuy for $70 million in January 2017. The following month, Walmart bought outdoor specialty retailer Moosejaw for $51 million. Then in March, Walmart paid $75 million for ModCloth, an eclectic shopping site for women's fashions. Walmart is also said to be in negotiations to buy Bonobos, a hip fashion retailer geared to millennial males. Reaction to the acquisitions has been mixed, depending on whom you ask. Retail analysts applaud the company's radical move, pointing out that several well-known traditional retailers have closed their doors or filed bankruptcy because they failed to take part in the e-commerce revolution. Fashionistas, on the other hand, are lukewarm about the move. However, McMillon's decision to allow the online retailers to operate independently may help retain loyal customers. The new e-commerce strategy may also lure typical in-store shoppers to take advantage of the expanded offerings available through both Walmart.com and Jet.com. Critical Thinking Questions 1. What are some advantages of Walmart purchasing established web businesses? 2. What impact is Walmart's acquisition of nontraditional retailers likely to have on the shopping habits of Walmart's customers? 3. How will the aggressive e-commerce plan implemented by Walmart affect operations at its retail locations? Sources: Brad Stone and Matthew Boyle, "Amazon Won't Know What Hit 'Em!" Bloomberg Businessweek, http://www.bloomberg.com, May 8-May 14, 2017; "What an Acquisition of Bonobos Would Signal About Wal- Mart's Strategy," Forbes, http://www.forbes.com, May 9, 2017; "Walmart Acquires Niche Online Retailers, to the Dismay of Hipsters," Denver Post, http://www.denverpost.com, March 24, 2017; Alana Abramson, "Walmart Acquires Online Women's Retailer ModCloth," Fortune, http://fortune.com, March 17, 2017; Phil Wahba, "Walmart's 29% Online Holiday Season Growth Sends Shares Jumping," Fortune, http://fortune.com, February 21, 2017; Laura Heller, "Take That Amazon: Walmart Buys Moosejaw for $51 Million," Forbes, http://www.forbes.com, February 15, 2017; "Walmart Acquires ShoeBuy for $70 Million," Business Insider, http://www.businessinsider.com, January 6, 2017.
First Walmart purchased footwear e-tailer ShoeBuy for $70 million in January 2017. The following month, Walmart bought outdoor specialty retailer Moosejaw for $51 million. Then in March, Walmart paid $75 million for ModCloth, an eclectic shopping site for women's fashions. Walmart is also said to be in negotiations to buy Bonobos, a hip fashion retailer geared to millennial males. Reaction to the acquisitions has been mixed, depending on whom you ask. Retail analysts applaud the company's radical move, pointing out that several well-known traditional retailers have closed their doors or filed bankruptcy because they failed to take part in the e-commerce revolution. Fashionistas, on the other hand, are lukewarm about the move. However, McMillon's decision to allow the online retailers to operate independently may help retain loyal customers. The new e-commerce strategy may also lure typical in-store shoppers to take advantage of the expanded offerings available through both Walmart.com and Jet.com. Critical Thinking Questions 1. What are some advantages of Walmart purchasing established web businesses? 2. What impact is Walmart's acquisition of nontraditional retailers likely to have on the shopping habits of Walmart's customers? 3. How will the aggressive e-commerce plan implemented by Walmart affect operations at its retail locations? Sources: Brad Stone and Matthew Boyle, "Amazon Won't Know What Hit 'Em!" Bloomberg Businessweek, http://www.bloomberg.com, May 8-May 14, 2017; "What an Acquisition of Bonobos Would Signal About Wal- Mart's Strategy," Forbes, http://www.forbes.com, May 9, 2017; "Walmart Acquires Niche Online Retailers, to the Dismay of Hipsters," Denver Post, http://www.denverpost.com, March 24, 2017; Alana Abramson, "Walmart Acquires Online Women's Retailer ModCloth," Fortune, http://fortune.com, March 17, 2017; Phil Wahba, "Walmart's 29% Online Holiday Season Growth Sends Shares Jumping," Fortune, http://fortune.com, February 21, 2017; Laura Heller, "Take That Amazon: Walmart Buys Moosejaw for $51 Million," Forbes, http://www.forbes.com, February 15, 2017; "Walmart Acquires ShoeBuy for $70 Million," Business Insider, http://www.businessinsider.com, January 6, 2017.
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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How will the aggresive e-commerce plan implemented by Walmart affect operations at its retail location?
Transcribed Image Text:Chapter 1 Understanding Economic Systems and Business
57
First Walmart purchased footwear e-tailer ShoeBuy for $70 million in January 2017. The following month,
Walmart bought outdoor specialty retailer Moosejaw for $51 million. Then in March, Walmart paid $75 million
for ModCloth, an eclectic shopping site for women's fashions. Walmart is also said to be in negotiations to buy
Bonobos, a hip fashion retailer geared to millennial males.
Reaction to the acquisitions has been mixed, depending on whom you ask. Retail analysts applaud the
company's radical move, pointing out that several well-known traditional retailers have closed their doors or
filed bankruptcy because they failed to take part in the e-commerce revolution. Fashionistas, on the other
hand, are lukewarm about the move. However, McMillon's decision to allow the online retailers to operate
independently may help retain loyal customers. The new e-commerce strategy may also lure typical in-store
shoppers to take advantage of the expanded offerings available through both Walmart.com and Jet.com.
Critical Thinking Questions
1. What are some advantages of Walmart purchasing established web businesses?
2. What impact is Walmart's acquisition of nontraditional retailers likely to have on the shopping habits of
Walmart's customers?
3. How will the aggressive e-commerce plan implemented by Walmart affect operations at its retail
locations?
Sources: Brad Stone and Matthew Boyle, "Amazon Won't Know What Hit 'Em!" Bloomberg Businessweek,
http://www.bloomberg.com, May 8-May 14, 2017; "What an Acquisition of Bonobos Would Signal About Wal-
Mart's Strategy," Forbes, http://www.forbes.com, May 9, 2017; "Walmart Acquires Niche Online Retailers, to
the Dismay of Hipsters," Denver Post, http://www.denverpost.com, March 24, 2017; Alana Abramson, "Walmart
Acquires Online Women's Retailer ModCloth," Fortune, http://fortune.com, March 17, 2017; Phil Wahba,
"Walmart's 29% Online Holiday Season Growth Sends Shares Jumping," Fortune, http://fortune.com, February
21, 2017; Laura Heller, "Take That Amazon: Walmart Buys Moosejaw for $51 Million," Forbes,
http://www.forbes.com, February 15, 2017; "Walmart Acquires ShoeBuy for $70 Million," Business Insider,
http://www.businessinsider.com, January 6, 2017.
Transcribed Image Text:Critical Thinking Case
Walmart Gets Serious about E-Commerce
As the world's largest retailer, Walmart has built thousands of brick-and-mortar stores in the United States,
Mexico, and elsewhere. Although a success story when it comes to traditional retail locations, Walmart has
struggled with its e-commerce efforts, with recent online sales accounting for about 3 percent of the
company's $300 billion in annual sales. The company has tried several different e-commerce strategies in the
past, but none of them was an overwhelming success. Some company insiders objected to the pricing strategy
used for online purchases; they were fearful that Walmart's lower prices online would take customers (and
sales) away from the retail locations.
Doug McMillon, Walmart's CEO since 2014, believed a significant change was needed in the company's e-
commerce business, and he recently made changes in a big way. Over the past two years, Walmart spent
billions to acquire several online companies to expand its e-commerce business in an effort to take a small bite
out of retail giant Amazon's success. In 2016, Walmart purchased Jet.com, an e-commerce site that sells a little
bit of everything (books, clothing, electronics, etc.) at discount prices. Once the $3 billion acquisition was
completed, Jet's cofounder and CEO, Marc Lore, who now runs Walmart's e-commerce platform, worked with
McMillon to identify other established online companies to add to their e-commerce portfolio, and add they
did.
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