
Walmart to Buy Bonobos, Men’s Wear Company, for $310M - robbiemitchell
https://www.nytimes.com/2017/06/16/business/walmart-bonobos-merger.html
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alangou
This is a great move by Walmart.

It is targeted directly at competing more effectively with Amazon. I don’t
believe either company is worried about dilution of their respective brands.

What Walmart needs is to keep leveraging its existing strengths — logistics
and supply chain, as well as immense amounts of capital — while invigorating
its online retail division so that over the next 20 years, they can appeal and
sell to their target demographics (which is what millenials will become) with
the same stickiness that Amazon does.

Bonobos is popular among young male professionals that are relatively fashion-
conscious. There are many workplaces in New York where the majority of new
grads and millenials buy most of their wardrobe from Bonobos. The key —
Bonobos is often the first place they look at. Andy Dunn has demonstrated he
knows how to build a business that’s both sticky and appealing.

He’s joining an online retail division headed by Marc Lore, and a Walmart that
is shifting gears to face the Amazon behemoth.

Purchasing Bonobos is part of their strategy of capturing audiences and
market-share in the short-term, and of building a portfolio of brands that
they can continue to expand for the long-term.

Bonobos (as well as other recent acquisitions), and Jet.com, which Walmart
acquired August 2016, are brands that were born online and grew online. These
acquisitions mean people like Marc Lore and Andy Dunn, well-versed in the art
of courting a customer base through primarily-online channels, are now at
Walmart. And I foresee this trend continuing as Walmart’s ship slowly but
steadily steers towards the age of online retail.

~~~
rch
The people you mention really dislike Walmart.

Still a smart move as it lets Walmart snag some mid-america market share from
Gap/Banana Republic/Old Navy (the last makes most of the money anyway).

~~~
ajmurmann
Yes, as someone who almost exclusively wears Bonobos and is a relatively young
professional I'm super worried about this. I've been to Walmart probably not
more often than the times. I can only assume and hope that Walmart did this to
get access to people like me and not to transform Bonobos to cater to people
who wear three wolf shirts.

~~~
__derek__
I wouldn't be very optimistic:

> “Assortment is driving a lot of these acquisitions,” Wal-Mart Chief
> Executive Doug McMillon told investors last month before the ModCloth
> acquisition became public. “There are some suppliers that don’t want to sell
> on Wal-Mart.”

To me, that sounds like a plan to make Bonobos (or Moosejaw) a Wal-Mart
company rather than to apply Wal-Mart's expertise to the acquired company.

[1]: [https://www.wsj.com/articles/wal-mart-in-talks-with-
bonobos-...](https://www.wsj.com/articles/wal-mart-in-talks-with-
bonobos-1492534209)

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yalogin
I have never heard of bonobos before.

Also, Walmart is trying to get more into online business and Amazon is getting
into brick and mortar stores to marginalize walmart and target even more.
Interesting.

~~~
hourislate
Bonobos is super expensive. I don't know how folks can afford to shop there.
It would kill me to spend $300 on 3 dress shirts when I can get the Kirkland
Brand for a fraction of the price. Even their sweat shorts are $80 and the
Nikes I have were $15 on sale. The cheapest you can get a pair of jeans for is
$100, Eddie Bauer has really nice jeans for half of that when they are on
sale.

I get the feeling Walmart is desperate to compete and will buy anything these
days when all they really need to do is build a Web site that is easily
navigable and works. You think a company with their resources could afford the
talent required to build a site like AMZN has.

~~~
mmmpop
> Bonobos is super expensive. > I can get the Kirkland Brand for a fraction of
> the price. > Eddie Bauer has really nice jeans

Bonobos sells itself as an affordable yet fashion-forward brand, so perhaps
you're just not the target consumer?

~~~
jschwartzi
Yeah, $100 a shirt is fairly competitive with other fashionable brands.

I end up buying more expensive shirts just because I don't feel as bad about
having to have them altered. My arms are really long and my neck/shoulders are
really broad relative to my height, so even slim or "extreme slim" dress
shirts have a tendency to billow out of my pants unless I have them taken in,
and I always have to have the arms slimmed significantly as well. When you
spend that kind of money to have the clothing altered, you might as well spend
a little extra to alter nicer clothing.

~~~
diegoprzl
Take a look at TMLewin and CTShirts. I think they offer the best value in
shirts. Spending more than 60$ on a shirt is not necessary.

I don't know about US, but in Spain you can get a tailor made shirt for 100$.

~~~
huac
CT definitely offers some of the best deals. Kamakura offers extremely high
quality shirts for $89, though. Bonobos is just not high enough quality to
support the hundo price point.

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wonderwonder
I feel like walmart through no fault of their own has a bad brand in certain
groups and would be well served by creating some sort of alternate brand to
umbrella its acquisitions. Some people look down on those who shop there and
in order to target those negative often times web savvy people they should
create a child brand.

~~~
skywhopper
Walmart is plenty at fault for their brand's image. Until very recently,
they've been on a trend of pushing workers harder, driving suppliers to
produce shoddier and shoddier products, lying about potential jobs to get
small towns to subsidize building stores that run local companies out of
business, then moving those stores to new locations and refusing to let
competition lease the empty building they left behind, intentionally screwing
around with employee schedules to make it hard for them to keep the second job
that they need, making life miserable for long-time workers so they can avoid
paying more than entry-level wages... the list can go on. Walmart has no one
but itself to blame for its image.

~~~
wonderwonder
While I agree with you in regard to wages and their employees treatment, I was
referring to the way monied people view the store and those that shop there.

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mmmpop
I heard of Bonobos quite a while back but never handled a pair of their chinos
until about a year ago while shopping at Nordstrom. They certainly hit a price
point for people that would get sticker shock from some brand like Adriano
Goldschmied, but the quality of the pants is a bit out of line even for $90...
so I guess there is a bit of irony in Walmart buying them :)

~~~
xxSparkleSxx
That's too bad. I've heard a lot about them, but never tried on a pair.
However, I do have a pair of AG chinos that I bought on sale and they fit like
heaven.

~~~
mmmpop
I wanted to like them but the material just felt shoddy.

AG chinos are undeniable proof of a higher power... they are incredible pants
and worth every penny.

~~~
jimmywanger
AG jeans are the brand I wore for a long time. They fit great and flatter me
right out of the box, no tailoring required.

But the material is a bit thinner and doesn't hold up as well as raw denim.
However, raw denim is a bit more of an investment. It takes 2 weeks of
constant wear for raw denim to feel "right", and you're supposed to buy
undersized and let them stretch to your body. Once you do that, they're really
nice. However, before that happens, it's like wearing a lower body
straitjacket.

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philfrasty
Is this a regular ecommerce valuation? Would be 2x revenue @150 Mio [1].

[1] [http://www.retaildive.com/news/report-bonobos-
raising-100m-t...](http://www.retaildive.com/news/report-bonobos-
raising-100m-to-expand-brick-and-mortar-footprint/429879/)

~~~
snowman311
That multiple doesn't seem crazy for a relatively early stage ecommerce
startup. But, I'm guessing the acquisition price was based more on Bonobos'
private valuation. Bonobos has raised ~$125 million so a $310 million
valuation would be reasonable.

[https://www.crunchbase.com/organization/bonobos#/entity](https://www.crunchbase.com/organization/bonobos#/entity)

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jpeg_hero
Is this a good outcome for those involved? or was it a mercy deal a la
modcloth?

I know long haul for everybody, esp Andy. Looks like money raised is less than
purchase price, so is there some meat on the bone in this acquisition?

~~~
opportune
Looks like an acquihire. Andy seems to be getting a pretty decent position
within the upper management of the ecommerce division at Walmart.

This is all speculation: Perhaps it's part of some sort of internal coup
within Bonobos, where Andy wasn't happy with some internal board/finance
shenanigans. By taking a lesser valuation but moving into a big position
within Walmart (likely with huge bonuses), he could end up getting reimbursed
at a level disproportionate to his equity at Bonobos.

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5706906c06c
Walmart Labs, their e-commerce division has been on an acquisition frenzy for
a while now. I recently interviewed there for a role that was directly
involved with the M&A activities regarding technology and infosec.

Just look at the list of acquisitions here:
[https://www.crunchbase.com/organization/walmart/acquisitions](https://www.crunchbase.com/organization/walmart/acquisitions)

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egonschiele
WHY? I've bought most of my clothing from Bonobos for the last few years, I
guess I'll look elsewhere now.

> Partnering with Walmart — the biggest bricks-and-mortar retailer around —
> might have seemed extremely off brand for Bonobos.

YES it is. And "I think Walmart is misunderstood in some ways." isn't an
explanation. Bonobos and Walmart are totally different in my mind, I can't
imagine I'm the only Bonobos customer disappointed by this change.

~~~
fashionofftopic
Is it though? I've found Bonobos to be of mediocre quality and boring design
which doesn't call for the price point they are at. For $125 you can start
getting some really nice shirts from other brands (Saturdays NYC, La Paz,
etc).

I think they probably can lean on Walmart to lower their production costs and
possibly cut their prices to offer Walmart customers an option that is above
their typical retail choices.

~~~
lanius
Aren't they known more for their pants? Their athletic fits are perfect for
me.

~~~
ethbro
Afaik, they're talked about a lot in terms of their actual-slim and really-
slim (aka tailored) stuff vs the poorly cut or unavailable true-slim at other
retailers.

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losteverything
If i recall lore and/or Mcmillon said they are going to become experts in the
product and online merchandising in Wal-Mart's various departments. Like
apparel, sporting goods, housewares & domestics, pets, jewelry, auto, craft &
celebration, gaming. To be the best at knowing at the product level.

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wonder_bread
If only Wal-Mart had better branding...

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tryitnow
This might be what they're trying to buy here, dunno if it will work, but
they've got the capital to try out a variety of things.

~~~
wonder_bread
Very true, it just remains to be seen whether the "main street murderer"
stigma will remain despite this push

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pitt1980
seems like 2 different aspects of the brand

the perception here seems to be that Wal Mart only sells stuff that 'people of
Wal Mart' want to buy

there's is probably plenty of room in Wal Marts brand to get at - 'we sell
everything, down market stuff and up market stuff'

\--------

wal mart's impact on Main Street - while (somewhat) real - is a separate
question

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geori
For those who have never heard of bonobos, their pants fit exceptionally well.
Andy & co focused on doing one thing, having quality pants that fit really
well. The fit of the clothing matters more than anything about bonobos and it
is where most brands screw up.

~~~
skywhopper
Do you mean they fit _you_ really well, or that they go out of their way to
provide a big variety of styles, cuts, and sizes so that they potentially fit
_anyone_ really well?

~~~
hn_throwaway_99
No, is not about a large variety of cuts and styles. They became well known
because their pants, while generally on the slim side, don't make you look
like a hipster in skinny jeans, but they also don't look like parachute pants.
In the US, mass market men's pants tend to be really baggy and unflattering
(aka "diaper butt") for anyone with a slim or athletic build, and that was the
niche Bonobos filled.

In short, their pants just make your butt look good.

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cocktailpeanuts
How interesting to see Amazon and Walmart making major acquisitions on the
same day.

One is for offense, the other is for defense.

Goes to show that the future is Amazon and not Walmart.

~~~
athenot
> One is for offense, the other is for defense.

I wouldn't be so sure of that. In our tech circle, Amazon is indeed the
darling and we love to hate on Walmart. However the latter is definitely
skilled at logistics and supply chain optimization. Walmart is skilled in cut-
throat margin markets, with the power to shift the upstream supply in order to
meet its own goals. They are also better positioned to serve a wider
demographic than just the upper middle class.

~~~
bsder
Amazon is the _darling_. Where have you been, boy?

Seriously, Amazon comes in for more than its fair share of (often deserved)
hate here on HN.

~~~
qmarchi
Though never quite reaches the level of WM

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lis
I am wondering what this means for solidus.io. It's the shop system powering
bonobos, which is basically just a fork of Spree Commerce.

~~~
tildedash
Highly worried for Solidus. I just started using it for one of my side
projects.

Is this the time for another fork of spree/solidus?

~~~
qmarchi
Disclosure: Am at WMTech.

The project won't cease to see improvement in the open source version. Hell,
we have a large team dedicated to open source for stuff exactly like this.

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theprop
This is going to be a disaster. They are anti-Walmart. Walmart needs to stay
true to its vision of low price, high quality. Bonobos is high price, high
end. "But for now, there are no plans to offer Bonobos’s $98 chinos or $128
dress shirts in Walmart’s 5,000-plus stores. Instead, Walmart is hoping to
learn from Bonobos." Anytime you spend $310 million "hoping to learn"...you
have no idea what your plan is and that means you fail when you're in
e-commerce and aren't focused.

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aisofteng
That's a pretty bold claim. It sounds like speculation to me, though. Do you
have anything to back it up with?

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theprop
It's very hard to make m&a work at high valuations. Very few companies have
done m&a well -- maybe just facebook & google & apple to a lesser extent.

It's very hard to make e-commerce work. E-commerce is checkered with failure.

Not sure why they'd acquire a hybrid high-end retailer along with a bunch of
other strange e-commerce firms. They seem to be focused on apparel -- may be
some plan for apparel?!

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kev009
Quick, everyone buy a hipster company

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amauta
I would rather buy from a well known brand than spend almost the same amount
at Bononos lol.

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amauta
Also what I see interesting with Walmart is that they are pushing towards
blockchain. If they actually continue in this path. It would beat the shiz out
of Amazon.

