Wal-Mart Stores Inc. hasn’t wasted time in leveraging its $3 billion acquisition of Jet.com — and making it even more clear that Amazon is directly in its sights.
Jet.com on Thursday revealed that it acquired apparel and accessories site Shoebuy.com for $70 million from IAC — in a deal that closed Dec. 30 and is seen as a turning point for Wal-Mart when it comes to fashion. The deal also puts further pressure on Amazon since Shoebuy is a direct competitor of the Amazon-owned e-tailer Zappos.
Shoebuy sells 800 brands, more than one million products for men, women and children, including suede boots for $750 and Baffin parkas for $798.94. This is a completely different market than the current apparel and accessories offering at the Bentonville, Ark.-based Wal-Mart, where a Moda cinched dress costs $5 and a basic stretch tube dress retails for $6.45 at walmart.com.
Wal-Mart has long seemed more interested in selling groceries than apparel. However, the category, including footwear and accessories, is looking more attractive as food price inflation chips away at already thin profit margins and uneven foot traffic in SuperCenter stores. From 47 percent in 2008, Wal-Mart’s grocery business increased to 56 percent of total revenue in 2015 and the category commands a disproportionate amount of space in stores. Wal-Mart is watching warily as competitor Amazon innovates in the grocery arena with stores that don’t require cashiers — and reports that 2,000 will be built within the decade.
“Fashion” has long been a dirty word at Wal-Mart, which never fully recovered from the hype surrounding the failed Metro 7 brand, which bowed in 2005 and was subsequently discontinued. George, the label from its British subsidiary Asda that was introduced in the U.S. in 2003 and was intended to be a cornerstone of the department, hasn’t achieved the level of success in America that it enjoys in the U.K. and less of the brand has been seen on walmart.com recently.
Jet.com is clearly Wal-Mart’s vehicle for pursuing fashion. While bringing some of the Shoebuy aesthetic to walmart.com isn’t an immediate priority, “We’ll certainly take a look at that in the future,” a walmart.com spokesman said. “At the right time we’ll work closely with different apparel brands to discuss which items can be made available across our family of sites.”
After the $3.3 billion Jet.com acquisition was revealed in September, Wal-Mart Stores president and chief executive officer Doug McMillon said his rationale for buying the business included its popularity with urban Millennials who look for savings on premium products. McMillon sees Jet.com as the shining knight that will help close the gap with the $83 billion Amazon, which could otherwise further swamp walmart.com, which trails with $14 billion in sales.
The Walmart.com spokesman said Shoebuy represents shoes, apparel and accessories, which taken together “is the number one category for digital commerce. [Apparel and accessories] surpassed computer hardware for the first time last year. It’s a really import category for the customer. For Jet.com, Shoebuy is accelerating their expertise in the footwear business and we think it’s going to accelerate Walmart.com’s expertise in the footwear business.”
Shoebuy sells everything from $699 Patagonia jackets to $88 Cass luxury shapewear slips, $519 Zamberian hiking boots to $794 Arche lug sole boots.
The site has an outdoor bent with outerwear brands such as Merrill, Ibex, Salomon, Woolrich, The North Face, Nau and Fjailraven. Performance wear includes CW-X Revolution gym tights, $199; 2 XU three-quarter MCS thermal tights, $129, and Under Armour storm full zip Swacket, $119. For fashion, there’s a Scully fringe lamb suede jacket, $300; moto jacket, $279 and knee-length boar suede ruffle coat, $279. Southwestern-themed Laundromat sweaters are made from 100 percent wool. Tommy Bahama, Prana and Toad & Co. offer women’s dresses and Capezio dance camisole and tutus for girls.
Footwear runs the gamut from performance with Salomon Alpine Trail running shoes, $249.99, to Aquatalia Rhumba stretch knee-high boots, $749.95. Other footwear brands include Frye, Cole Haan, Adidas, BCBG Max Azria, Taryn Rose, Steve Madden, Karen Kane and Polo Ralph Lauren.
Shoebuy will operate as a stand-alone retailer and complementary side site to Jet.com, the company said. Mike Sorabella, Shoebuy’s ceo, Sorabella’s executive team and the site’s more than 200 employees joined the Wal-Mart e-commerce organization, but will remain headquartered in Boston.
“Shoebuy has been in business since 1999,” the walmart.com spokesman said, noting that the company “is a well-established e-commerce player in the footwear industry. They have deep expertise and strong consumer relationships. Due to the nature of the category, they already have really rich content such as great photos. All those things will serve to enhance our overall customer experience at Jet.com. It will accelerate our business and enhance the customer experience, so it’s a really good fit. Now that acquisition is closed, we’re more focused on accelerating the businesses together and making sure that suppliers interested in expanding their reach by selling on Jet.com know that they have that option open to them.”