Walmart Launches "Store No. 8" E-Commerce Venture

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Marc Lore, CEO of Walmart eCommerce U.S., on Tuesday discussed the company’s plans to launch a new venture, called “Store No. 8,” which will operate as a Silicon Valley incubator for new online stores.

The incubator will focus on startups engaged in machine learning, artificial intelligence, robotics and augmented reality.

Lore unveiled the plans at the annual Shoptalk conference in Las Vegas.

The move reflects Walmart’s ambition to catch up to Amazon in the e-commerce retail space. Lore took the helm of Walmart’s e-commerce business after Walmart acquired Jet.com, the company he cofounded.

More Walmart acquisitions are in the works, he said, as the company accelerates its expansion in the online arena.

Established Distribution Network

Walmart intends to take advantage of its already strong presence in brick-and-mortar locations, which can serve both as traditional showrooms for customers and as distribution centers for online shoppers who want to find clickable discounts and pick up purchases from a reliable distribution center that is close to their neighborhoods.

“Walmart does a pretty good job of enabling online sales for its retail inventory,” said Michael Jude, a program manager at Stratecast/Frost & Sullivan.

“Where it falls short is enabling a retail ecosystem where many companies can sell goods and services under their umbrella,” he told the E-Commerce Times.

Amazon has put together an enormous technical and intellectual property base to support and extract revenue from such an online marketplace, while Walmart has fallen short in that regard, Jude added.

Walmart currently operates almost 11,700 retail units globally, including 4,672 in the U.S. alone. It also operates in more than 6,300 in overseas markets. In addition, it runs 660 Sam’s Club warehouse locations.

Walmart’s Shopping Spree

Lore’s announcement followed several months of strategic acquisitions by Walmart. It has added a number of online apparel retailers to its growing Walmart online ecosystem, allowing them to retain their own brand identities and human talent, with the goal of building on existing customer relationships.

“These are small, but they are telling and they’re tactical,” noted Charlie O’Shea, lead retail analyst at Moody’s.

“Walmart starts to pick things off in subsegments of retail and bolt them on,” he told the E-Commerce Times.

Walmart earlier this year acquired ShoeBuy for US$70 million. Founded in 1999, it was one of the first retailers to sell shoes on the Web.

Although Shoebuy continues to operate under its own brand — with CEO Mike Sorabella, his top executives and 200 employees remaining in place at its existing headquarters — it now is part of the Walmart retail e-commerce business.

Walmart next acquired Moosejaw, an outdoor apparel and sporting goods retailer, for $51 million. Considered one of the leading online stores in the category, it operates 10 physical locations.

Under that agreement, Moosejaw CEO Eoin Comerford, his executive team and the company’s 350 employees became part of Walmart’s e-commerce retail operation, but continue to operate under their own brand at the same locations.

Walmart’s most recent acquisition, ModCloth, brought one of the leading online specialty retailers of women’s apparel and accessories to the retailing chain.

Modcloth is known for offering a diverse range of apparel for different body sizes and lifestyles, and for promoting a positive body image.

As with the other acquistions, ModCloth CEO Matthew Kaness, his top executives and the retailer’s 300-plus workers will continue to operate under the same brand and at the same locations as before.

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David Jones is a freelance writer based in Essex County, New Jersey. He has written for Reuters, Bloomberg, Crain’s New York Business and The New York Times.

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