Walmart e-commerce CEO Marc Lore says the company will make more acquisitions | Code Commerce 2017



I'm going to call up mark Lori CEO and president of Walmart ecommerce us is that right hey mark you can see good to see it so we got a lot to talk about well I think what makes most sense is probably to start out with some of the new Zia stuff which is been on a bit of an acquisition spree yourself since you've been acquired I guess only is it six months ago six months right around the day yeah so just quickly run through them most recently is company called ModCloth women's fashion retailer mostly online I did shoe buy Moosejaw and before you acquired by Walmart you did hey needle which is furniture so what I have some assumptions on what the strategy is but what is this how big how big a part of your overall strategy is acquisitions and what is this acquisition strategies yes so I think I mean I think long term the game is won and lost in the long tail for mass merchants I think you know it's easy to get you know parity of assortment on sort of the head and more commoditized stuff like toys an electronic from it starts to get long tail like home and shoes and fashion it's much harder and so we thought faster to accelerate those categories by buying companies that already had expertise relationships with the manufacturers and great product content we've also empowered these leaders to actually run that category across both Walmart a jet so it's worked out so that means they're going to run they're going to run their own business they're gonna run that category on jet comm should their vendors decide to sell on jet or just I mean not only their own vendor relationships just run the entire like Mike's or Bella for example the she by CEO he's going to run and be responsible for shoes the retail shoe business on Walmart jet and shoe bye so to sort of bring it bring it all together so I think another thing these these acquisitions have in common is I think they've all been you haven't announced all the prices I think they've all been under 100 million and some of them have been in not great financial situation so I'm curious is this strictly opportunistic or it like companies who don't have a lot of options and you feel there are some there is some value in their brand and what they do or or what like would you be doing these deals if they were a couple hundred million dollars yeah I think for every vertical there's different players and it just so happens we've been fortunate to find these incredible gems of assets with great relationships you know great product quality that we'd be able to get it at a pretty good price but my no-lose might not always be that that way right and so should should we see this pace of and cadence of acquisitions continue we're being pretty active yeah I mean we're we're behind we need to catch up and you know we're we've seen what these acquisitions have done to the business it's definitely you know bid a nice surge in the categories that we've been acquiring and so we'll continue to do it we get it's a it's a great way to sort of quickly build out that tail of assortment and and the other way and I'm assuming you're thinking in some of these categories the other way would be you know building out on your own building these brand relationships that would take is it the time are you skipping steps is that the manor it's definitely time you know shoe buy for example might have 30 or 40 you know shoe merchants the relationships to set they've got been taking images and writing descriptions for the last ten plus years it's just it's so yeah it's a lot of heavy lifting to simultaneously be good in every one of these categories so if you from my perspective if you try to imagine a scenario where Walmart would have an advantage over in in the digital world over someone like your former employer Amazon you would you think that the in-store experience has to be transformed in a way that it is actually that there's an advantage there that there are some things Amazon and other digital pure place can't do that are either more can for people and so one of these I'm tracking very closely at Walmart is what like what are those things what are the things that the stores allow that really make it a better experience for people and so either I'm curious either things that are coming or things that maybe I'm missing like what are those yes so where do you need to know it's a great there are definitely significant advantages of having the Omni it's not maybe as it's a little more nuanced than you may think so it's not just simply tell me that was a bad question just like Katrina yeah I think was a great question actually we'd like to announce something today if this is the first and sort of many things that we'll be doing to sort of leverage domini in a way that the pure place can but I personally think this is really cool if you now go into a Walmart store and you buy diapers dog food shaving cream and you'll see all those purchases in your easy to reorder list on mobile and on your web apps coming coming real soon but I think that so let me just run through that again so going and you're basically you're going to take what your purchases from in store and make them available to you in a really easy list and the reason why you need that or want that as a customer is is what well if you try and you put the average person will buy you know a hundred different consumable products go online and try and find those precise hundred things that you're looking for and build a list it takes a really long time you can simply go into Walmart store buy a hundred things and when you get home it's like neatly organized right on the homepage easy reorder there are your hundred things they're sorted by how often you buy them categorize nicely there's no latency to add them to cart you can just go ding ding dinging and checkout so I think yeah that's a good move that's a good convenience you remove a lot of the set-up cost in the future you'll be able to bring that list back into the store so you can see all the things that you typically buy make sure that like I think that's just like for starters there are some big things that we have in the works that a coming would have something to announce in April which would relate about which I think is gonna is it April it's not yeah yeah okay so but but I want to give us a little peek your PR people are like they're having drinks yeah it's I think I'll just it's something I mentioned the last in the last session when you think about the fact that Walmart is doing the volume it's doing in those stores means that its buying Walmart is able to buy in truckload quantities and bring them into warehouses and deliver a truckload quantities of product out to over 4,000 points of distribution so so that makes it really cost effective to bring things from a fulfillment center to a local area it doesn't necessarily mean you want to stock the stores and then go in the stores and then pick the product and then deliver it that's not very efficient but leveraging the power of a centralized fulfillment network leveraging you know better buying because you're buying is this so much volume and then being able to move that product in full truckloads that's not to be underestimated the power of that especially in areas like fresh fresh meaning grocery exactly yeah um at a very high level I wonder when they when the company acquired you and Jett are they is the Walt are they trying to do a better job reaching the current Walmart customer in new and innovative ways or does Walmart think it has enough elasticity and its brand to actually reach out to new new customers who might have thought of they have one one thought when they think Walmart and so I'm curious when you like you think about your job is it serving the current Walmart customer or is it attracting new and you're not allowed to say both yeah no I think the advantage of having both Jett in Walmart is that we can position both brands in in unique ways to serve a different customer that's not overlapping so Jett is going to focus on serving the urban higher income millennial sort of shoppers and Walmart's at lauren Amazon who you think or know our Amazon Prime shoppers or can be can be cannot be yeah I mean it's just I think the brand we're seeing that the jet brand is resonating with higher income urban Millennials and we're growing very fast in what is it what is it about the brand or what jet is doing that you think you're doing that is it this is it is it the savings I do I think it's empowering Pete it's empowering people the shop smarter I think people don't want to feel like they've been taken with respect to pricing if they're shopping smarter there's definitely something to that I think just the brand itself just the look and feel the the hundred little tiny touch points every day we're adding and doing new things to delight customers we're investing a lot in customer care it's it's definitely we're elevating and pushing the brand higher we're attracting higher end brands as well on jet and I think that will continue and what what categories are your agenda ready in all categories it's just we're definitely elevating the experience we've just launched we created I did a thousand personalized videos using the thousand song name all one of those you're like riding a bicycle in a warehouse I was like that doesn't look like Marty but it was you that's not something that a typical mass player would do writes definitely the other goal is to sort of connect build that emotional connection to the customer in a way that that's not traditionally done and and we can focus on doing things like that because the brand's is sort of separate right when I had you on a podcast Chara's podcast she turned it over to me for a couple hours which was nice of her it was I think was about 15 months ago so it was pre acquisition and I asked you like like what are you doing like going after Amazon this seems crazy and your answer at the time I believed was something along the lines of it doesn't have to be Amazon like this is a huge market there's no clear-cut number two that's what you said that you now work at Walmart do you have a different answer for that yeah I think I mean you're definitely starting to see Walmart jet combined pick up some momentum we we had a great fourth quarter growth 36% govt and beginning q1 with the launch of two day free shipping we saw our nice uptick in sales as a result of that so so we're starting to see the momentum that's kind of table stakes though right like today and she's not there is that the reason you do it yes seems one hand you could say like that should have been done well to two days okay two days table stakes without having to pay a membership for it yeah absolutely that's it so again okay I'll go next so uh you know another I think when the acquisition happened one of the things that surprised some people on one hand was that you I think I believe your your deal with Walmart is you'll stay at least five years some reporters and I in the space like have a on going bed about whether that happens or not but I'm curious about like what needs like what needs to change for you to feel more and more confident that this is a place you could be for the long haul yeah no I think it already I already know so you know before the acquisition happen it's been a lot of time with Doug McMillon the CEO we built an incredible amount of trust early days and he's sort of delivered on everything he said he would it more which a mark like which is return this way and you go and yeah what's really empowering me and the team to do it eats to be done to move as fast as we need to move to accelerate growth and he come and win over the long term and I think you know I've been there like you said almost six months we've been able honey still the honeymoon a little bit still the honeymoon although then through holidays together we had an opportunity to completely restructure the business we've made three acquisitions and we're looking to do more we've launched the two day free shipping drop the minimum to 35 and like I said there's a bunch of things kind of like that are coming to the next few months that would be able to do the only way to get that much done in that period of time is really you know till to kind of move and act like we're startup and that's what it feels like we're just we're just run it I mean it doesn't feel any different being inside Walmart than it did running jet zero this is my like really okay absolutely no you've been in or act even and I can make the argue I can make the argument that we're running faster because I don't have to worry about raising money like the capital is there you're pretty much committed you were pretty good at the raising money but takes a lot of time takes a lot of time yeah the Capitals there and we've basically been able to take the best of both companies and sort of bring it together so we brought the backend logistics together we share back in logistics now and we share merchandising in the retail organization so we have sort of one merchant for each category across both sites and we've been able to take sort of the best people on both sides and build an all-star team teams fired up we've got momentum we've got assets that that no one else has that we're going to be lever in in in a really unique way in like in the coming months that I think people be interested to see so really excited so six months in how are you actually spending your time so I think a lot about you're not running gedcom day-to-day anymore right that's right that's that's Eliza Landsman who was previously she had a title that chief customer officer right which felt like a starter I thought it would whatever it was it was a startup title that was but she was on your senior executive team and is now running day-to-day so what is your involvement in jet is it is it the same as it is for the companies you've acquired that I'm trying to get a feel for how you're actually spending your time if not running jet comm yeah I mean I'm spending a lot of time spent a lot of time obviously on restructuring getting the right people in the right the right spots working a lot on on getting the culture right and then sort of just really strategies is figuring out what big moves we need to make whether it be acquisitions whether it be two-day shipping whether it be some of the things we're working on that's coming coming down the pipe soon that's really what the job's focused on when you look at the competitive landscape what is success for you with like five years from now like how will you judge I mean you still have a job that's like that's like one bar to clear but like how do you how do you judge whether whether the acquisition was a success and how long and how long do you need to sort of feel that feel that out like that should have done but yeah you know I think I mean five years we can definitely do a lot of damage I mean I'm hoping to see progress a lot sooner than that where we know that we're starting to sort of turn the corner I mean in the short term looking at you know the e-commerce growth rate I think is one is one big way also just the experience so we've created a new metric which we call the customer value prop index the CBI it's basically you brought that from jet now we I mean with knowledge from jet but we sort of made it up okay I do you know and it's basically have it find it display it price it deliver it five Bell wall coasters are that quickly yeah do you have the products people want can they find the products are they displayed with the information that's necessary to make a decision as the priced right and is delivered fast like those are sort of the five bellwethers and we've had a an external company actually Jordi's here stella thank you a lot to joy t a joy DS team has done a great job of independently sort of taking a series of skews and putting him through this filter and scoring us against how we're doing relative to the market and just sort of performing what do you do with that information well that now we've got the information we've got the transparency and the goal is to push all them you know to 100% do have every product people want can you find it easily and so we've sort of changed the sort of workings of the company from being output focused saying okay what's our gmv what's our Marg and all these sort of outputs to say forget about forget about the outputs outputs will be right in a long term let's focus all of our attention on getting these inputs right and it's actually it sounds pretty nuanced but actually made a big difference already and every day every week every month all we care about is are we adding more products and as people want other priced right can people find the information right you know because to date quite frankly we haven't done a great job and we're focused on a lot of things a lot of shiny objects and and a lot of outputs and things and not on the on the inputs and if you get the inputs right and so we're basically just we're hiring a lot more merchants people merchandisers and we're on this is for online exclusive yeah for online for calm and having them focus on very narrow categories and just perfecting it we're just going category by category and so five years from now the goal would be that yeah we've got that every category like perfected the CBI is near 100% across the board that's the goal and prime customers are coming over or we're going to talk about the whatever percentage of US households are prime customers and those are the target yeah this is a long-term game you know we're offering two day free delivery on two million products the top million products sold online represent two-thirds of everything but online so having two million products on free two days most of what you want with a pretty low minimum so we think that's a really compelling value prop given the prices that we're offering and we feel like we're well positioned to target that that mass customer want to loop back to the acquisitions for one second you know when when a company gets acquired by Walmart and if they have a core customer base and it's not a Walmart customer base that Walmart name can be scary in a lot of ways and we saw this with the most recent ModCloth acquisition where you know just search you know social media and you see some like people freaking out like I'm just not going to shop ModCloth anymore because Walmart I'm sure there have been other people say that about yeah every they said that about diapers calm I say it about every acquisition as always some Peters a different diapers c'mon I mean you had a special service there but diapers commodity this is not commodity so I wonder like do you think do you have to worry about that as you're either pitching companies I'm acquiring them or how do you I don't I don't worry about if we were gonna if we will go into tomorrow take the products on ModCloth and put them on Walmart and can discontinue investments in the them is an independent brand absolutely get it and I'd be complaining to we're not doing that we're keeping them as a fully independent subsidiary and we're going to invest aggressively in the business in the business and the customers are going to be better off as a result that's that's the bottom line they've done some amazing things to empower women and we want to you know we believe in that as well we believe in the power of empowering people and we're going to invest invest aggressively there okay I think we got time for one more and then I'm thinking we're going to have some from the audience let's just look one year one year forward someone goes and visits Walmart calm and they know what it looked like today should they like how will they know it's you know it's an it's a sort of a new operation with with new blood running it like will there be concrete ways or is this ideal is this really like a decade-long no no I think in a year I mean even it's six months later if you just look at where it was six months ago we've now got two million products on two-day shipping before the ship towns for three to five days so you've got that if you shop and buy consumables you've got almost the entire in-store assortment and much more available a nun stocked like it's a pretty clean experience on consumables and we're going to be aggressive about about making sure that foundation is correct and at the same time we're adding product from a needle and shoe by blue straw you know what I mean are those marks being added into Walmart or opera the brands the brands that want to be on and want that exposure yes certain brands might not maybe they'll be on jet first and then we'll see but you just see the CVI index continue to climb you'll just see more products better pricing faster delivery times it's the basic fundamentals will get better and it's one of those things where you know one day you'll go to the site and have a good amazing experience and you won't ever show up anywhere else say thanks mark okay let's get some questions from the audience I'm sure we know come on alright here we got actually we'll start here or some and it will come to you Julie please tell us who you are what company you're from yeah my name is Ravi Connie Gandhi and work for zebra Technologies so mark I would like to know you know comment your comments on global you know footprint like you know for example we talked about the US side of it I know you have investment in Jerry calm in China and there was a rumor in a couple of months back that you are investing in Flipkart so what is your global I know again with growing economies like India and China what's your strategy yeah yeah that's a good question I am my mandate is to crush the u.s. I'm responsible for the US the India you can speculate on the others yeah the global the global e-commerce businesses the new structures that they're reporting directly into the sort of country CEOs I think you know that the first order of business and priority is to make sure that we win in the US and it's obviously a much bigger opportunity I mean this with all respect there's wind being number two or like what is winds what is when when means win okay okay all right I'm gonna happen in twelve months but when means with okay cool do you have another mic up here for Julie tell the audience here mark I'm Julie Bornstein I'm at stitch fix nice to see you it's been fun to hear your speak twice today thanks for doing that so this one's better yeah yeah um although Scott did a good job too um I have two questions one is I guess they're both a little bit double clicks on things that jason has already asked but I'm still curious about one is a little more about the ModCloth acquisition and just specifically I mean it's a fairly small brand and you know from reports it hasn't had a ton of growth and so I'm curious why are you guys looking to add brands to develop kind of a grouping of exclusive brands to sort of the Walmart and jet opportunity because they had a balloon I have a beloved following with a fairly specific customer base the second is is jet you're still the focus to get share away from Amazon okay so easy ones layups yeah so so the respect to ModCloth yeah I mean I think I I think the brand does have an amazing loyal following I think the product is is really unique I think what they're doing to empower women is is really impressive and I think there's a lot we can learn from that brand I also think there is an opportunity to acquire brands like mod that are sort of vertically integrated great margins and it is unique product that's not found anywhere else only so many businesses is exclusive right I'm not qualify so but a good portion of it yeah okay but a good but I think it's that portion of the business that is most interesting and in I think there's opportunities yeah to have unique assortment and look at other vertically and hear to brands as well in terms of taking share from Amazon I don't really think about it that way I think about come on I don't think about taking share away from Amazon I think about you know taking share from the market as a whole this is going to be a trillion dollars in ten years I think about how do you get to 10 20 there you know how do you get a big percentage of that share and the best way to do it is to sort of make sure that you're sort of got both brands positioned in a way that that where there's the least overlap and the most opportunity to sort of you know get more share so that's what we're doing and it's I think it's working with one right here tell us who you are please sure my name is Paul notch have a little retail business called craniology which nobody here has ever heard of it's a rounding error for MU store so to set that sort of scale but we we sell in Amazon we have some physical stores as well but my question is some so I'm from a marketplace perspective to be able to bring out brands that we work go pro Smith picked the night picked in the leading outdoor brands we work with they're absolutely deathly afraid of the W and it's a very difficult story to be able to communicate to to a conservative brand who doesn't want to be associated with wall monic cetera so just ask a question about tools and help in ways that we can tell your story to our brand partners and be able to expand your market place and bring products that either boost your or add to the the mix that yeah I don't use those can happen that's that's a great question so I we've had a lot of success so far in getting brands to come on to Jett first before Walmart so because Jed is you know geared for a more premium higher end customer but the brands feel more comfortable going on there and it's just building relationship doing doing business doing what you say and then hopefully over time you know proving that we can take some of these brands to to Walmart I think the brand the store brand of Walmart is different from online in terms of the type of customer that shops there if you look at the demographics it is a higher-end woful own custom that shops on walmart.com then in stores and it'll take time but I think you know we can we can tell that story I'll take one more okay right here hello Andrew from turn five a question for you about people something unrelated to everything you guys have been talking about that's a group I like people so let's do it but that's good it's a good start yeah how do you find people to add to your team that are you know good at taking big calculated risks in EECOM you know we've it's easy to find people who want to take big bets and when I'm talking about big calculated risks there you know with jet comm you guys were spending hundreds and hundreds of millions of dollars and telling people that your only intent was to spend more hundreds of millions of dollars on customer acquisition on crazy marketing you know there's people who love to take really big bets with other people's money there's fewer people who are you know willing to take other people's bet to take really big pest with other people's money and do it in a calculated way how do you find those people and add those people to your team sure that's that's a good now you do have wall street right so like your public mark markets like the risk there's there's like a leash on the risk yeah or the risk you take yeah no I think I mean you said something that resonated with me about you know it's easy to take other people's money and spend it because it's not your own and I think you know if you're a missionary like versus a mercenary you look and think about things differently I mean when you think about taking people's money you think about them placing their trust in you and wanting to do the right thing even more so because they've placed your truck their trust in you and and I think that's the value system we tried to create a jet it's really around trust and empowerment and and that's why I think we connected so well with Doug and Walmart because they really trusted us and wanted to empower us and when I look at hiring people I'm looking for people that are more missionary than mercenary and making sure that they're for the right reasons it's not about how much money you're going to pay them because soon as somebody pays them more they'll go and leave so that's why well they were in Hoboken and not Silicon Valley well it's because I live in New Jersey but right all right I think I think we're about out of time mark thank you okay thanks [Applause]

2 thoughts on “Walmart e-commerce CEO Marc Lore says the company will make more acquisitions | Code Commerce 2017

  1. 2 day shipping with minimum $35, does that mean their margins are around 30%?
    otherwise they would be losing money on shipping. I thought supermarkets margins are a lot thinner.

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