Wal-Mart Stores Inc. added another e-commerce company to its portfolio Friday, acquiring women's clothing retailer ModCloth for an undisclosed amount.
The acquisition fits with Wal-Mart's strategy of beefing up its e-commerce business with online retailers across various segments.
In the past year, the company has purchased Jet.com, Hayneedle.com, Shoebuy.com and Moosejaw in deals ranging from $3.3 billion to $51 million. Ravi Jariwala, a Wal-Mart spokesman, said that the transaction amount was "along the same lines as the p̶r̶e̶v̶i̶o̶u̶s̶ past two* deals," referring to the acquisitions of ShoeBuy.com for about $70 million and Moosejaw for $51 million.
Last month, Wal-Mart U.S e-commerce chief and former Jet.com CEO Marc Lore said during a conference call with reporters that the retailer was looking for additional acquisitions and would be interested in adding companies that made "business sense."
Chief Executive Officer Doug McMillon told investors during the Merrill Lynch 2017 Consumer and Retailer Technology Conference in New York earlier this week that Wal-Mart is targeting companies "that are great in terms of the assortment and the service they provide, but they don't have enough money to lose to go market their brand and scale it."
"So by joining Wal-Mart, they get some benefit as it relates to the halo of marketing," he said.
"They can sell through the brand that they've established. They can take their assortment and make it available to customers [of] Wal-Mart or Jet and certainly get some synergies as a result of that."
ModCloth was started in Pittsburgh by high school sweethearts Susan Gregg Koger and Eric Koger in 2002 when they were attending Carnegie Mellon. The company has developed a loyal following thanks to its vintage-style clothing, strong social media presence and pioneering promotion of size diversity.
The company moved its headquarters to San Francisco in 2009 and now employs 350 people in offices in San Francisco, Los Angeles and Pittsburgh, according to its website. The entire team, including chief executive Matthew Kaness, will be retained and will continue to operate ModCloth's brand, site and Austin, Texas, storefront as is.
Jariwala said designers selling on ModCloth, as with those on its other new retailer sites, "will now have the opportunity to serve more customers through Jet.com and our other e-commerce sites."
"As we're trying to reach customers through these acquisitions, what we can do is create conversations with the brands selling through those websites," he said.
"For example, the whole catalog of Shoebuy.com doesn't instantly populate over to Jet.com or Walmart.com. We would have individual conversations with those brands about whether they'd like to come onto Wal-Mart or Jet. That is a decision that is fully at the discretion of the brands themselves."
Carol Spieckerman, president of Spieckerman Retail, a retail strategy company, said in an email that ModCloth's brand and loyal shoppers was "a winning combination for Walmart, one that will continue to bolster its fashion quotient."
She said ModCloth will benefit from the acquisition, too."As popular as the brand is with some consumers, the company has struggled to scale its business. Walmart will bring much-needed backing and resources to ModCloth without getting heavy-handed."
Spieckerman called the news "the latest in what is sure to be a string of apparel-focused acquisitions."
Business on 03/18/2017
*CORRECTION: Wal-Mart spokesman Ravi Jariwala said Wal-Mart’s acquisition of online clothing retailer ModCloth cost “along the same lines as the past two deals,” referring to acquisitions of ShoeBuy.com for about $70 million and Moosejaw for $51 million. A previous version of this story misquoted Jariwala.