Andy Dunn

Bonobos co-founder and CEO Andy Dunn joined Walmart Inc. (No. 3 in the Internet Retailer 2019 Top 500), when the retail giant acquired the men’s apparel brand in 2017 for $310 million.

Now, as Walmart’s senior vice president of digital consumer brands, Dunn oversees the digitally native vertical brands Walmart has acquired and the incubated brands the company has built internally. His portfolio includes: Bonobos, ModCloth, Eloquii and Allswell.

Following his keynote address at the Internet Retailer Conference and Exhibimartion in June in Chicago, Dunn sat down with Internet Retailer to talk about Walmart’s digital brand strategy.

Internet Retailer: How are things going at Walmart?

Andy Dunn: Busy. It’s funny, I talk about this with Marc [Lore] frequently, when you build something as an entrepreneur, you don’t really know what it might be like to work at a large enterprise. And this feels, in some weird way, busier, which doesn’t feel possible because building something from scratch is obviously a pretty immersive exercise. But the sheer scale of what Walmart’s doing and the number of different things that can go on in a big company when you have more scope and resources and means—we’re running really, really fast right now. …It’s kind of like pivoting from entrepreneurship to almost running a portfolio or collection, like a venture capital firm, but rather them being all minority investments, we own them all. So it’s super, super engaging work.

IR: What is the plan for all these brands?

AD: Depends, by brand and by stage. If you look at where we are with Bonobos, I think we built something that’s more at scale. We’ve got the ecommerce distribution, we’ve got 163 of those guideshops, we’ve got a great wholesale partnership, predominantly with Nordstrom (No. 18 in the Top 500). Now, it’s about evolving from not just being about the goods and products that we sell but also about what we believe. If you want to have an iconic brand, at first it’s helpful to have stuff that people want and you do a good job of getting it to them.

But where we are at now, decade two, if we do this right, we have the chance to become iconic, and that’s increasingly about the story you tell about what you’re doing. And then making sure the talent can replicate and the culture can endure. So, it’s a business where, after a decade, we continue to not just do what we’re doing but in many ways get better at it and evolve it. That’s why we’re so excited and grateful for the work Micky Onvural (CEO of Bonobos) is doing, as one example.

I can’t go through all the brands because that probably would take too long. The other end of the spectrum is something like Allswell, which is brand new and we want to make sure that it matters and that that hero product catches on. We might have shut down if we hadn’t figured out there was an opportunity to mindmeld the direct-to- consumer know-how we have from Bonobos on how to build a brand digitally. [We had] the realization that the Walmart core customer in that category is going to be a lot more active if we fulfill what they expect from Walmart, which could be called ‘everyday low price’ or ‘shocking value.’

This is new territory for us, even as Walmart, [because] it’s not the opening price point for a mattress. It’s, in some regards, premium relative to some of the other mattresses that we sell, but relative to direct-to-consumer brands that have emerged in the mattress category. So, we’ve discovered this really cool spot between opening price point, but south of what I would describe as, “direct-to-consumer online-only brands,”… because we can just get it to a lot more people.

And then, let’s not wait a decade to figure out how to weave in a story and the purpose. We know how important [a story and purpose] is to the direct-to-consumer piece of it. Let’s build that in now. We know that people are looking at Walmart in a lot of ways right now—sustainability, what we’re doing across a whole range of initiatives, like disaster relief. What’s exciting about this is that we get to [tell a story] through brands. Because brands are a great way to tell stories. And now everything we do can now have this lens of, how do we make sure that the brands matter above and beyond the products and services that we offer?

IR: Even though Allswell is a Walmart brand, it has its own URL. Can you explain that strategy? 

AD: This is the future. The future is that brands have an independent connection, that direct-to-consumer connection, just the same way that Bonobos came up. And then there’s an opportunity for those brands to be distributed with the right wholesale partners. And we learned this coming up at Bonobos, when about five or six years later we launched with Nordstrom and saw that business take off.

We saw there’s power in having a partner. So, what we are doing now with the brands that we are building is we think about acquisitions and think about where it’s going to have a direct-to-consumer [relationship]. And then [we think about how] there’s going to be distribution across the Walmart ecosystem, which over time might not just be Walmart and Walmart.com but also Sam’s, Jet, perhaps internationally Flipkart.

IR: Why not just start selling the mattress on Walmart, which has so much more reach, than starting a fresh brand on its own?

AD: I think it comes down to the difference between private label and private brand, and what I might call proprietary brand. I think there’s a certain je ne sais quoi that’s important with brands. I call it magical. [Walmart’s CEO] Doug McMillon talks about soul. Some people call it belief-driven. Brands shouldn’t just belong to a multi-brand retailer. They shouldn’t be engines of economic activity only. They have to stand for something in the hearts and minds of consumer that is aspirational, where the consumer can say, I love this brand. The legacy of Bonobos is—if  I can say it—the direct-to-consumer innovator and pioneer, and we understand that.

It’s important [to have] that independent component of the brand to build that connection, to tell that story. And the brands wouldn’t be as powerful if they were at Walmart and didn’t live independently as well. People wouldn’t know. ‘What is that?’ You go online. ‘Oh, there’s Instagram? I can kind of see what this is about. Oh, they have an online purpose, that’s cool. There’s an actual store.’ It’s the difference between the private label and something that just happens to be owned by Walmart and is an awesome brand.

IR: Are you guys looking to do similar brand launches or acquisitions?

AD: Both. We’re going to keep looking at both. We’ve got other community projects that are in flight. And we are still active in the market and having lots of conversations with existing brands, talking to entrepreneurs, meeting people every week.

I’ll give you an example: We’ll do something like Allswell, where it’s not easy to build a brand no matter the category. Where this new complexity isn’t so crazy, using the internal capabilities that we had, we felt we could go build a great mattress. And we saw that the opportunity with a coil foam, hybrid mattress, great edge support, and we found our way into engineering it, without taking the quality out at an awesome price point. So, we can do that internally, and we did that within about 12 months, which is pretty awesome.

The flip side would be a brand like Eloquii, a plus-size fashion brand where there’s a half-decade of work that goes into getting fit right in any apparel brand.  So, we saw Eloquii in what they had done from a fit standpoint and a design standpoint. A brand with 200,000-plus consumer followers, a multi-year history, five, six, seven years, depending on when you start tracking it. We felt like, we can’t do that. We don’t have a half-decade. This is an urgent [customer] problem in the market right now. … Let’s do an acquisition on this one, if they are open to it. We had a great conversation with CEO Mariah Chase; she was really like-minded. We brought her down to Bentonville (Walmart’s headquarters in Arkansas) and said, ‘What do you think?’

She ended up being on the same wavelength as Marc (Marc Lore is Walmart’s president and CEO of U.S. ecommerce and founder of Jet.com) and I, which was, ‘I’m going to come in here and work here. I don’t want to just sell my company, I want to work here.’

IR: Do you think you’ll do a similar strategy of a category where the SKUs aren’t as intensive, launch on your own and acquire companies in different categories?

AD: That’s probably a little bit of an over-simplification. What I can say is there’s some other things that we’ve looked at where it doesn’t necessarily fit like a rule. But generally, where there is something where we feel like we have an in-house capability to do it well, and an idea that’s good, then we’ll do that internally. But there are other things to look at, and it’s like, ‘Oh my God, I don’t even want to imagine doing that, that’s so much that needs to be done. This team has done it so great.’ Eloquii is a really good example of that. So, there’s examples on both sides that were successful.

IR: Are you guys keeping Jet?

AD: Yeah. Jet’s really important. If you think about winning in grocery in urban markets, Jet’s critical. Walmart’s reputation is built so much around proximity—(90% of Americans live within 10 miles of a Walmart store). There’s a huge percentage of America where that’s not true, like for example, where I live in New York City, or parts of this market in Chicago. We think it’s important to have another brand and another banner that can serve those customers with a new offering. With an offering that we are building off of a lot of the capabilities and know-how that we have. So, the focus has changed to getting really dialed in on that urban grocery opportunity. But we believe that Jet is important.