Walmart.com launches internal innovation hub to vet future acquisitions

Walmart.com has launched an internal hub it calls Store No. 8 in the heart of Silicon Valley in hopes of harnessing e-commerce innovation that will ultimately help the retailer grow online sales and market share.

Marc Lore, CEO of Walmart.com and jet.com, made the announcement Monday during the Shoptalk Conference held in Las Vegas this week.

Lore said he spends much of his time evaluating potential startups for acquisition. Store No. 8 will do just that under the direction of Seth Beal of Wal-Mart eCommerce U.S., and Kate Finnegan of Jet.com. Lore said the retailer is just beginning with its acquisitions because there are other specialty retail categories where deeper expertise is needed.

When asked about the strategy Wal-Mart is using with the startup acquisitions of ModCloth, Moosejaw and ShoeBuy, Lore said the retailer is convinced it will win the e-commerce war by having something for everyone. He said Jet.com and Walmart.com, though they share logistics and merchandising expertise, are different brands. He said Jet.com services more upscale and urban consumers and is growing its shopper base at increased speed since marrying Wal-Mart. He recently shot 1,000 personal videos from Jet.com to provide a personal touch for shoppers regarding products sold on that site. He said not having to spend the time to raise capital allows Jet.com to focus on improving service and product offerings.

He said Walmart.com reaches the masses and is also continuing to improve over the past six months. Lore said shoppers in stores will soon find their complete basket purchases on Walmart.com in a shopping list form they can print and take back to the store, or simply click to re-order and pickup in a store of their choosing. He said it would take a long time to curate a long shopping list on Walmart.com but soon customers won’t have to do that work themselves.

Lore said it’s important for Jet.com and Walmart.com to not overlap but grow their own distinct shopper bases. With respect to the recent acquisitions, Lore said the CEOs will have responsibility not only for their own websites but also from the specific category at Jet.com and Walmart.com. For instance the CEO of ShoeBuy will oversee all footwear sold at Walmart.com and Jet.com. Lore said the there is a wealth of untapped opportunity in many categories and these acquisitions and more in the future that will be addressed.

He said Wal-Mart CEO Doug McMillon has empowered him to make radical changes in the operation and he’s giving the CEO’s of the acquired startups much the same liberation. Lore said five years from now he expects Walmart.com and the new startups acquired to be major disruptors in the market.

“We can do a lot of damage,” he said.

Lore said the long term gain is to perfect its expertise in every category. He hinted that acquisitions in the future will likely be more vertically integrated where the online retailer largely controls its supply chain such as with ModCloth. He said suppliers will be given an opportunity to sell into Jet.com and possibly Walmart.com where it makes sense.

“We are having success getting brands to come on to Jet first. We build that relationship there and do what we say. We hope to try and move some of them on to Walmart.com over time,” Lore said. “My mandate is to crush the U.S. The first order of business is to make sure we win in the U.S. and that means win, But it won’t happen in 12 months.”

Annibal Sodero, assistant professor of supply chain logistics at the University of Arkansas, said recently that Wal-Mart must grow online market share through acquisition. He said the retailer has few other options given that Amazon is the dominant player. He said growth by acquisition gives Walmart.com access to consumers they might not otherwise have, but he said the different cultures of the startups might not be easy to integrate with Wal-Mart.

Lore said that has not been problem because Wal-Mart is not integrating the brands, but instead providing them with financial security to grow in their own space, while also helping Walmart.com and Jet.com in the process.