Why Walmart Just Bought Bare Necessities, Its Second Purchase This Month

Acquiring brands will continue to be one manifestation of Walmart's ecommerce growth ambition against Amazon. (Photo by Igor Golovniov/SOPA Images/LightRocket via Getty Images)

In its bid to fight against Amazon, Walmart has once again stepped on its acquisition pedal: on Friday, the world’s largest retailer said it has bought online lingerie retailer Bare Necessities, following its purchase earlier this month of online plus-size  fashion retailer Eloquii.

Walmart said Bare Necessities will bring it “deep category expertise” in the intimate apparel space, an area that it said has seen fast growth online but one that has “complex sizing and highly specialized products.” Bare Necessities joins Moosejaw outdoor gear, Modcloth women’s clothing and Bonobos men’s apparel among brands Walmart bought for its U.S. ecommerce portfolio since its $3.3 billion purchase of Jet.com in 2016.

Bare Necessities, founded in 1998 and carries more than 100,000  units from more than 160 brands from Calvin Klein underwear to Spanx shapewear, described itself on its website as the largest online specialty retailer of intimate apparel. As retailers seek to meet the increased plus-size apparel demand, it said its bras have “unmatched size range” of bands that go up to 56 and cups that come as large as O. In comparison, on the website of L Brands’ Victoria’s Secret, the size goes up to just 40 DDD.

However, you’d be mistaken if you think Walmart’s thesis behind the acquisition is just about getting a bigger share of the online intimate apparel market as part of its growing fashion focus. Yes, some of the assortments on Bare Necessities, which will continue to run independently, can eventually expect to be featured on Walmart.com and Jet.com, Walmart’s play for urban millennials. (Just look at Moosejaw: it in August became the first of Walmart’s acquired brands to curate and open an outdoor gear  shop on the retail giant's namesake site.)

The purchase of Bare Necessities is just as much about getting Walmart, a retailer that some upscale labels still hesitate to be associated with, the talent, knowhow and brand connections it needs to fast expand its online assortment in various categories to attract online shoppers seeking convenience and one-stop shopping.

In a familiar playbook that it’s used with many of its other acquisitions -- notably having Jet.com’s co-founder Marc Lore lead its Walmart U.S. ecommerce business, Walmart said Noah Wrubel, Bare Necessities’ ceo and co-founder, will now also lead the intimates category for both Walmart.com and Jet.com.

As Amazon continues to grow and expand more into the brick-and-mortar space, best illustrated by its Whole Foods purchase, stakes are high behind Walmart’s shopping binge.

Walmart’s namesake U.S. unit, more than three-fifths of the company’s total business and the centerpiece behind the investment case for the stock, in August reported its best quarterly comparable sales in more than 10 years. Key to that growth wasn't just the traffic and average transaction growth, but the better-than-expected 40% jump in online sales that has also played a central role in its brick-and-mortar store performance.

Walmart has doubled down on online order for grocery pickup and delivery and installed more pickup towers inside stores to capitalize on its nearly 4,800 US stores located within 10 miles of 90% of the U.S. population -- a competitive advantage it repeatedly touts at a time when the costly last-mile delivery is a  big differentiator for retailers seeking to satisfy consumers’ fast-delivery demands.

Just watch Walmart's TV commercials these days touting online order for curbside pickup or delivery, and you’ll get where Walmart’s big strategic focus is. “Walmart’s omni-channel initiatives are contributing to comparable sales growth,” Walmart president and CEO Doug McMillon said in August.

However, as fast as Walmart is growing, Amazon isn’t about to let anybody threaten its sizable online lead either. And Walmart has a long way to go to catch up to Amazon.

While Walmart's share of U.S. ecommerce market rose to 4.3% in 2017 from 2.9% in 2012, Amazon's online U.S. market share jumped to 46% from 24% during the same period, Euromonitor data has showed.

Separately, a Rakuten Intelligence study of online receipts from more than 3 million U.S. online shoppers found Walmart.com, including Jet.com, held only a total of 1.8% market share as of June 30, far shy of Amazon’s 34%. Its study didn't even capture data from Amazon Fresh purchases.

Traffic wise, even though Hitwise data showed growth in visits to Walmart.com in August outpaced that even to Amazon, total online visits in the 12 months ended August to Amazon topped 21.1 billion, more than four times Walmart.com’s 4.77 billion.

Jet.com’s traffic, meanwhile, in August slumped 52% ahead of its recent site relaunch -- where Walmart seeks to use Jet.com to nail urban areas like New York with high concentrations of affluent millennials that it hasn’t been able to penetrate. As part of the Jet.com facelift, another of Walmart’s marquee purchase, Bonobos, is now selling on Jet.com even as it’s still absent from the company’s namesake site.

Don't expect Walmart’s buying appetite to stop anytime soon.

Related on Forbes: Walmart's Jet.com is getting a makeover

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