Wal-Mart Stores Inc.’s grocery pickup service arrived a dozen years too late and cost the retailer its advantage, John James told entrepreneurs at Wednesday’s CPG Innovators Conference in Bentonville.
“I think the writing is on the wall,” said James, founder of Fayetteville-based Acumen Brands and its consumer-direct sales superstar Country Outfitter. More recently, James founded Hayseed Ventures in Fayetteville, which has helped launch 12 companies in the past 18 months.
“Amazon switched to ‘for’ internet sales tax, and that shows me Amazon is going to build a warehouse in every state. They’re building a Fedex/UPS competitor, and I don’t know what Walmart can do; their tremendous lead is getting smaller every day.”
James conceded that Walmart’s recent acquisition of Jet.com was “either the best or worst purchase ever made; I personally think it was best. But Walmart has taken far too long to use their 3,800 stores as an advantage.”
James’s remarks were part of the fifth CPG Innovators Conference, a day-long event presented by Supplier Community in conjunction with Startup Junkie Consulting.
To the gathering of entrepreneurs and Walmart suppliers, meeting less than two miles from the Bentonville headquarters of the giant retailer, James joked, “I just lost all my friends,” based on his admission.
“There’s something visceral about the experience I have with Amazon,” James said. “I’ve been a Prime member since the day it came out. Everything shows up on my doorstep, and I think that’s where we’re headed.”
A self-proclaimed “tech geek ex-doctor,” James launched his first ecommerce venture from a University of Arkansas dorm room in 1993, easily financing medical school with the earnings. In 2009, he and a partner launched Acumen Brands and raised $104 million in venture capital with a disruptive strategy of bypassing retailers and mining customers directly via Google and Facebook.
A retailer today is essentially a “dumb pipe,” James said.
“Consumer loyalty is in the brand, not the retailer,” he said. “People don’t care where they buy stuff, as long as it shows up with a good experience and good price.”
Emerging brands will continue to disrupt giants, James predicted, as with Dollar Shave Club (recently acquired by Unilever for $1 billion) and the Honest Company. Both relied upon bite-sized content to fuse direct lines of communication with consumers.
James said he met in Los Angeles with founders of both companies.
“You’re going to see a lot more of these brands coming up,” he said. “Disruption comes from outside an industry and kills all the sacred cows.”