Walmart reads the signs of the times

I was initially puzzled to read about a tie-up between Walmart, the nation’s largest retailer, and thredUP, a San Francisco-based used clothing reseller.  However, Barron’s put it in perspective.

Walmart is taking a new tack in its effort to expand in e-commerce.

The company said this week that it formed a partnership with the clothing reseller ThredUp in a move that will see Walmart’s website offer secondhand clothing. The giant retailer will take a cut of the revenue.

Barron’s has written before about how ThredUp hopes to capitalize on a number of trends in the industry, from the treasure-hunt mentality that has fueled off-price retailers to millennials’ desire to shop more sustainably. We’ve also noted how Walmart has been willing to spend to boost its online presence in clothing, buying up brands like Modcloth and Jet.com to experiment with new ways to reach consumers.

. . .

The latest deal with ThredUp isn’t an acquisition. It will allow ThredUp products to appear on Walmart’s website, with Walmart providing free shipping for purchases over $35 and receiving a share of the sales.

Paying Walmart a commission seems like a reasonable trade-off for ThredUp, given that the partnership will give it access to a huge new audience.

Yet Walmart could also benefit from the deal, as it will have a large number of brands added to its site and get a piece of the preowned clothing market. Instead of making a risky acquisition, Walmart is mimicking Amazon.com, offering access to its site to a third-party seller.

There’s more at the link.

What we’re seeing is the emergence of online shopping malls.  In a physical shopping mall, people go “to the mall” to shop at an anchor tenant – a big store.  As they go to and from it, or relax with a snack in the food court, they see and are attracted to other stores in the same location.  The big stores attract customers to the small ones.  Online, customers go to Amazon.com or Walmart.com because they know they can get most of what they need there.  If, in the process, they can also be exposed to other businesses, and find interesting products there, they’ll do their shopping through the main site, which gets a cut of the revenues from such transactions.  Ergo:  an online shopping mall.

I think we’ll see more and more of this in future.  The big e-commerce sites basically have a lock on the market right now.  Smaller businesses would have a torrid time of it trying to break such a stranglehold from outside.  Therefore, as the old saying goes, “If you can’t beat them, join them”.

This may have an impact on independent authors and their books, too.  Right now, that market is owned by Amazon.com, which has made itself all but indispensable to most indie authors and publishers.  If another retailer such as Walmart can offer an alternative online home for them, with terms and conditions at least as good (if not better) than Amazon’s and comparable market penetration, perhaps with better advertising and publicity opportunities, that might open up the market to more competition.  That’ll be good for writers – and it can’t be a bad thing for readers, either.

Peter