Shelly Banjo is a Bloomberg Gadfly columnist covering industrial companies and conglomerates. She previously was a reporter at Quartz and the Wall Street Journal.

If you'd asked the founders of Bonobos a decade ago what their company would look like 10 years hence, it's unlikely getting gobbled up by Wal-Mart Stores Inc. would have been part of the picture.

The hip menswear brand -- which began selling pants from a Manhattan apartment and whose physical stores don't actually offer any items for sale -- doesn't exactly fit with Walmart, which predominantly sells groceries and gets 97 percent of its sales from brick-and-mortar locations. But the retailing giant has reportedly offered $300 million to buy Bonobos

Buyers Market
In true Walmart fashion, even the retailer's M&A department likes to scoop up deals at a discount
Source: Bloomberg Research
*Note: Walmart has not yet bought Bonobos for $300 million and a deal could always fall through.

Come to think of it, none of the small e-tailers in's recent buying spree of names such as Modcloth and seem like natural fits. And there are more deals to come, if recent comments from Walmart's e-commerce chief Marc Lore -- who joined Walmart via its purchase of -- are any guide.

Investors looking to make sense of it all should consider what's motivating the buying spree. 

Walmart spent $3.3 billion last year to buy, an unprofitable upstart, with the hopes founder Lore could finally help Walmart compete with rival Inc. After all, Lore had worked at Amazon after selling his previous company, Quidsi, to the Internet giant. 

Walmart had struggled for nearly two decades to understand e-commerce and was missing out on the retail industry's growth engine. When Lore became Walmart's digital head, he was given a mandate: Drive e-commerce growth fast enough to prove to Walmart board members that buying was worth it. 

Growth Spurt
Walmart's purchase boosted U.S. e-commerce sales, which rose 29% in the latest quarter from a year ago; but poor overseas sales dragged down total figures
Source: Bloomberg, Walmart

What's the fastest way to add sales? Buy up a bunch of companies that are already making those sales and sweep them under your corporate umbrella.

When Lore took over, he quickly learned what old hands at Walmart had struggled for years to fix: Cool brands like Nike Inc. wouldn't sell their stuff to the discount retailer. That meant its digital operations, which cater to wealthier shoppers, struggled to attract customers. 

But hipper brands were willing to sell stuff through, which didn't have the same brand-busting reputation as Walmart. Moosejaw, Modcloth and other recent acquisitions will also help Walmart offer sought-after goods to shoppers without them ever knowing their dollars will end up in Walmart's coffers. These deals also bring in employees that are experts in managing key online categories such as activewear and shoes, talent Walmart has lacked. 

Amazon Addiction
Share of primary household shoppers who shopped at Amazon or Walmart
Source: Kantar Retail ShopperScape
Note: Share of shoppers who shopped Amazon or Walmart at least once in the previous four weeks

The problem is, in true Walmart fashion, the retailer is trying to buy revenue growth on the cheap. So instead of paying up for bigger online players such as Wayfair Inc., Inc., or Staples Inc. -- which could really move the e-commerce growth needle -- Walmart is focusing on quantity. 

Many of Walmart's small targets have been struggling to boost sales quickly enough to attract additional venture-capital funding at what are already lofty valuations. As retail IPOs dry up, these e-tailers have little choice but to sell to a strategic suitor or wind down operations.

The downside to Walmart's corporate-savior strategy is that, by the time it scoops up these companies, top talent has already fled. Traffic and sales have flagged. And becoming part of Walmart doesn't exactly bolster a digital retailer's cool quotient. Those factors could lessen the positive impact of these deals on Walmart's e-commerce sales. 

That's what happened in 2012, after Walmart's previous e-commerce chief, Neil Ashe, bought more than a dozen struggling companies, many of them for scraps. The deals made Walmart look committed to growing e-commerce sales, temporarily boosting its stock price. But five years later, Walmart's online sales are still stuck at 3 percent of total revenue. 

Deal Boost
Walmart's shares are trading at their highest value since August 2016

For now, I can see why investors are giving Walmart the benefit of the doubt, sending shares up 7 percent year-to-date. The company deserves props for trying. Acquisition headlines at the very least create the perception Walmart intends to catch up to Amazon.

But with Walmart reverting to its old strategy of hoping small investments will yield big changes, it's hard to see why the outcome will be all that different this time around. Perhaps Walmart needs to think more ambitiously about how it will look in 10 years.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. Company lore says Walmart lost out to Amazon on the acquisition of parent Quidsi because Walmart wouldn't pay up to buy the company. 

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Shelly Banjo in New York at

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Mark Gongloff at