Why Walmart's New Acquisition Is Puzzling - Forbes

Walmart has been buying up all sorts of businesses of late. To me, one of the most puzzling acquisitions is the recent acquisition of Art.com; a purchase which includes all of its assets for an undisclosed amount.

Ever since Walmart acquired Jet.com in 2016, the company’s on-line business has soared. Mark Lore, who ran Jet.com, now is in charge of the entire e-commerce business of Walmart. He suggested a path to more growth through the internet and has added many new brands. Some of his acquisitions have been brilliant, including Bonobos, Moosejaw, Bare Necessities and ShoeBuy. They added to the soft-goods assortments available on the internet and gave the company better market place offerings. Even the agreement with Hudson’s Bay’s Lord & Taylor to set up an internet site for their merchandise offerings adds to the overall Walmart marketplace in an upscale way.

The new acquisition of Art.com will offer customers two million curated images - an array of affordable posters as well as limited editions of prints and art. Walmart indicated that the acquisition was to add to its specialty home experience which has a separate website. Art.com, founded in 1998, is based in San Francisco and is said to be the largest on-line art dealer.

That leadership position fits with Walmart’s overall strategy. The company has outlined that its on-line strategy to acquire category leaders with specialized expertise that enhance the customer experience. Management also looks for unique products customers cannot find anywhere else.

While Art.com is a market leader and can add unique offerings, this particular acquisition concerns me for two reasons.

I am not sure these offerings will speak to the core Walmart customer who tries to make ends meet. Many of the price points quickly top $100 and may be too expensive for these shoppers.
If the intent is to build a stronger business among Millennials, I am not sure that makes any sense either. Millennials have shown little interest in wanting to own material things. They want to live with as few assets as possible. Maybe they are scared of the economy, maybe they are not sure of their job security, or maybe they spent too much on their education and are now paying back their loans. Whatever the reason, these customers have not stepped up to shop for ‘decorative items’ in a big way yet. I think these are factors that must be considered for the full potential of this business and the timing for it to gain traction.

One wonders whether the new acquisition was made to avoid a competitor buying the company. So, over time, this may prove to be a smart move.

Walmart is a great global company. There are many opportunities for acquiring emerging e-commerce businesses that will make their market presence even greater. I think here should be greater customer focus when they make future acquisitions.

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