Issue No. 259: Walmart’s Next Acquisition


Over the weekend, 2PM released the first executive member brief. It covered quite a bit of ground in an in-depth report on Walmart v Amazon eCommerce called Walmart Ventures.

Here is a small excerpt:

The competition between Walmart and Amazon has never been stiffer. Consumerism has always been about the heart, until Amazon made it about efficiency and logic. But for items as intimate as what you wear and what you sleep on, is logic enough?

Walmart is betting on the heart again by focusing on brand affinity, representation, and reinvigorating consumer faith. By using eCommerce as the tip of the spear, their brick and mortar presence will innovate along with it.

It’s no secret that I tend to believe in Marc Lore’s vision for a modern Walmart. In my recent report, I focused on Walmart’s brand-equity growth by means of DNVB acquisition (Modcloth, Moosejaw, Bonobos, etc). And 2PM Executive Member Taylor Holiday called me on it:

Solid stuff as always Web. The question I have that this post ignores a little is related to logistics power. You touch briefly on the convenience element that Amazon focuses on and I wonder how Walmart will seek to combat this? The thing I believe would be super super interesting would be Walmart could combine the DNVB style slick brand launch with convenience of a logistics super power. Imagine Allswell style brand with Same Day Delivery. Now that would be interesting.

Taylor Holiday, Managing Partner of Common Thread

In my report, I made two tables available: (1) Walmart’s existing acquisitions and (2) Walmart’s target acquisitions. To Taylor’s point, in discussing Walmart’s appetite for acquiring sexy DNVB’s (or building them from scratch), it’s easy to overlook that they’ve also acquired Parcel (2017). Walmart is working on building that logistics super power. And if they can’t finish the job, another $1B+ acquisition is on the way.

Walmart on Parcel’s acquisition: 

New York City is the top market for both Jet and, and because of the density of the area – along with the proximity of our fulfillment centers – it’s the perfect place for high-impact innovation. Born and bred in New York City, Parcel has developed unique expertise delivering to customers in a distinctly challenging and essential market. This acquisition allows us to continue testing ways to offer fast delivery while lowering our operating costs. We plan to leverage Parcel for last-mile delivery to customers in New York City – including same-day delivery – for both general merchandise as well as fresh and frozen groceries from Walmart and Jet.

As further proof that logistics is on the minds of Walmart executives, look no further than last night’s Oscar’s campaign.

The star of each 60-second spot is the same as for Walmart’s current ad campaign – the retailer’s signature blue shipping box – a nod to corporate priorities in the battle to catch Amazon in e-commerce. 

Jack Neff, AdAge

And if I had to project Walmart’s war room strategy, a Postmates acquisition comes to mind. Nationally, it’s one of the most trusted of the last mile platforms and it’s proven that it can operate in many of America’s largest markets. Couple this with the company’s recent emphasis on grocery delivery and you’re looking at quite a bit of shared virtue. Walmart’s grocery business is of its highest priorities.

Assuming that Parcel’s acquisition was a test, the Postmates acquisition could be the beneficiary of Walmart’s single-market experiment. After DoorDash’s recent $535M raise, this is an acquisition that makes sense for the gritty and resourceful Basti Lehmann and company. And it’s a purchase that is in Walmart’s price range. Paging Marc Lore.

Read more of the issue here


Issue No. 246: DNVB&’s will be just fine

A last word: eCommerce is a bear

Consumers are becoming brand agnostic and DNVB’s seem to be holding on to their loyalty by appealing to internet-first consumers. It’s expensive but for some DNVB’s, there may be a positive outcome.

Read: From a digitally-native gold rush to an impending bloodbath

One passage stood out when I read Richie Seigel’s latest for his Loose Threads project.

While many people believe that Digitally-Native Brands have both larger addressable markets and cheaper acquisition avenues to realize their potential—leading to this influx of capital—there is little proof that these theories will result in long-lasting or profitable companies.

Building a successful brand takes time. While many Digitally-Native Brands have tried to take shortcuts—raising more money and spending it faster—many of these companies find themselves in precarious positions, with investors breathing down their necks, employees’ livelihoods in their hands, and uncertainty about what comes next.

When I reached out to a prominent (profitable) DNVB founder / CEO to discuss this prediction, we both agreed that it had merit. There will be many bad DNVB exits. But there will be even more heritage brands that will fail along with the stores that propped them up for years.

You know that age old adage, you only have to outrun one person to escape a bear’s pursuit? In this analogy, heritage brands are the ones being outrun by DNVB’s.

Of the heritage brands that Seigel lists in his second para, the publicly traded ones are trading at an average of -25% on the year. This includes Columbus’s own L Brands (owner of Victoria Secret); VS is a heritage brand that’s anchoring a crumbling stock due to inbound intimates competition from a growing number of DNVB’s.

In addition, most heritage brands rely upon department stores and costly ten-year leases to bolster sales. Most of these investments are quietly financed by toxic amounts of private equity. Someone check on J. Crew for us.

Wal-Mart, who invests heavily in DNVB’s, understands the importance of the internet as a platform for retail. They are doing something interesting to compete against Amazon:

“Wal-Mart Stores Inc. is near a deal to add Lord & Taylor to its website, part of a broader effort by the retail giant to build an online shopping destination that can compete with Inc., according to people familiar with the matter.” – WSJ

This is why Wal-Mart is doing this: They will now sell fashion’s heritage brands through, becoming a new-aged destination for all things department store: including Patagonia, Ralph Lauren, Nike, and maybe even Commes De Garcons.

This is while their six most recent acquisitions are also helping them appeal to new audiences. has already announced a private label. And it’s no secret that Wal-Mart is building a strong case with Mark Lore’s new strategy. In time, Wal-Mart will be a machine capable of launching new private-labeled brands that target the consumers of the heritage brands of old.

Mark Lore’s recent Lord & Taylor move has Bezos’ tutelage written all over it.

Amazon, Alibaba, and Wal-Mart are vying to become this century’s version of the department store. And every brand should be nervous but it’s the (eCommerce-lagging) heritage brands that should be most afraid of the bloodbath. These brands have invested little in eCommerce and even less in the types of communities that innovators like Stitch Fix seems to have fostered.

As consumers become more brand agnostic, heritage brands are closest to being devoured by the bear.


See more of the issue here.

Issue Issue No. 227: When Malls Fail, Go Private?



If malls are another victim of urban revival, so are they younger brands who depend on a volume of foot traffic to elevate their brand. Some retailers are finding ways to counter quantity by courting quality.

Over the next few weeks, we will take a look at brands who’ve adjusted their brick and mortar retail KPI in innovative ways. You’ll find interesting retail approaches, commentary from retail analysts, and commentary from DNVB executives.

Part 1: Brands that’ve successfully pivoted to retail in city clubs, athletic clubs, and country clubs – leaving traditional retail in the dust. Coming in Issue no. 268.

See more of the issue here.

Issue No. 203: Don’t do this, unless you’re like them


Normally, I’m not an advocate of politics spilling into business, nor I do believe that brand activism is a typically a sincere practice. I’ve gone on record as a fierce detractor of startups, brands, and agencies who hop on a social justice bandwagon while denying equality through employment within their own walls. Say “culture fit” three times, as fast as you can.

Cotton Bureau’s founders are a rare case of personal beliefs intersecting capitalistic opportunity. Watching Jay Fanelli fired up about a housing project being gutted for a larger Whole Foods in their homeland of Pittsburgh, really struck me. Often, folks talk the talk until silence can benefit them. And well, who wouldn’t want easier access to vegan sausage or the free-est of range eggs? Nathan Peretic, the more introverted of the two partners is equally passionate about matters of social justice.

They’ve sold t-shirts for Pod Save America, a podcast run by former Obama aides and speechwriters. And the investigative website ProPublica commissioned a “We’re not shutting up”shirt in response to Trump adviser Stephen Bannon’s statement that the media should keep quiet.

One of the best sellers was a t-shirt with the word “Resist” emblazoned on the hat of a character resembling a displeased Smokey Bear.

That t-shirt — titled “Only You Can Prevent Alt Facts” — will benefit national parks, though it’s not affiliated with any federal agency. So far, they’ve sold over 9,000 of that one.

It is through this lens that I evaluate Cotton Bureau’s heavy liberalism. As someone who is moderate and apolitical enough to avoid daily Twitter outrage, I’ll admit that the fire by which they pursue matters of public policy is often uncomfortable to me. But when authenticity and drive translates to their growing success, few can hold their positions against them. Not even whenyou’re against them. It seems that the popular vote is on Cotton Bureau’s side:

“The most t-shirts we’ve packed in a short amount of time is 15,000. It’s going to be about 50,000 over the next three or four weeks,” Fanelli says. “We’re not only all hands on deck; we’re asking anybody who has a brother or boyfriend or coworker who has a few hours to spare to help get these orders out.”

In Cotton Bureau’s small warehouse space next to the printing press, Nate Peretic’s brother, Joel, sorts through a pile of packaged Smokey shirts ready to ship to various places — everywhere from Fairfield, Ohio to Brooklyn and France.

Their most recent hits: “Whine about it” by BuzzFeed, “Only You Can Prevent Alt Facts“, “Friend of the Pod” and “Pod Save America“, “We’re Not Shutting Up” by ProPublica”, “Protect. Resist.”, “She Persisted“, “Country Over Party“, “Repeal and Go…Yourself“, and “The Signal.”

I marvel at their numbers, both sales and conversion rates (7+% in February). Even more so, I applaud how well they’ve maintained visual consistency across each of their designs. Each subsequent hit of a t-shirt becomes another statement for the Cotton Bureau brand. In the t-shirt design industry, this is rare.

And they are not slowing down. If I was consulting a brand (including the ones I remain closely aligned with), I’d suggest avoiding activism. This, especially if it isn’t in the brand’s DNA. But these guys and gals are different, they’re more than tweets and anecdotes. They are outfitting the resistance and selling shirts by the thousand.

Read: The Viral T-Shirts of The Trump Resistance


See more of the issue here.

Issue No 129: Technological (r)evolutions, all at once.

Third Transportation Revolution: Counterpoint

Assuming that you read today’s fourth article. Here is a great clarifier and counterpoint. If not, just ignore this!

via Ben Thompson, (Subscribe, trust me):

Zimmer’s piece had the sheen of futurism — autonomous vehicle fleets, the end of private car ownership, the changing nature of cities — but honestly it’s material that has been covered pretty thoroughly over the last few years. What was interesting was the complete absence of any data points that suggested Lyft would create the future Zimmer described. So what was the point of writing it?

In fact, I suspect the New York Times already told us last month.

Lyft, the second-biggest ride-hailing company in the United States behind Uber…has found that its options are limited. The company, which is based in San Francisco, has in recent months held talks or made approaches to sell itself to companies including General Motors, Apple, Google, Amazon, Uber and Didi Chuxing, according to a dozen people who spoke on the condition of anonymity because the discussions were private. One person said it was Lyft who was approached by interested parties…

Lyft failed to find a buyer partly because of cost, the people said. Lyft was valued at $5.5 billion after an investment round by G.M. and others in January, making it one of the more pre-eminent unicorn companies in Silicon Valley. Any sale would most likely have to fetch a premium from Lyft’s last valuation to be desirable to the company and its investors.

In this context Zimmer’s piece makes perfect sense: one of the primary conclusions in my piece Google, Uber, and the Evolution of Transportation-as-a-Service is that winning the future of transportation entails far more than simply building a self-driving car, and that Uber’s lead both in terms of its technology and customer mindshare is very significant. To that end, Lyft does make sense as an acquisition target for any company wishing to be more than a commodity supplier: they have useful technology and some degree of mindshare. The problem, though, is that Lyft itself is a doomed business; Uber can and will spend them into the ground, which makes that valuation tough for a potential acquirer to swallow unless Lyft is seen as the missing piece in winning the future. So, Zimmer is selling that future.

See more of the issue here.

Issue No. 107: Product Hunt innovates, Wal-Mart is out of control, and the customers you don’t want

Last word: On The Halo Effect

The halo effect is a term used in marketing to explain the bias shown by customers toward certain products because of a favorable experience with other products made by the same manufacturer or maker. The halo effect is a concept driven by brand equity.

Issue 108 will feature an original, top 10 list of the VC-backed startups who’ve best achieved the halo effect. The list will be determined by number of new product segments, growth in organic web traffic, in-bound links to their online retail, net promoter scores, and any applicable statistics from Internet Retailer’s databases.

See more of the issue here.