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What happens when Walmart sells Khaite, Dries Van Noten and pre-owned Birkins?
Last month, social media chatter stirred after luxury brands started cropping up on the budget retailer’s online marketplace. The Row, Rick Owens, Ann Demeulemeester, Jacquemus and more were all for sale (though The Row items appear to have been taken down from the site since). Insiders joked about the Antwerp Six winding up on Walmart. Others marvelled that the pieces weren’t even discounted, with items upwards of $2,000.
How did it get there? Matches had reportedly begun offloading its stock to reseller Luosophy in a bid to move product pre-liquidation, who uploaded the stock onto the American retailer. In reality, administrator Teneo didn’t sell the stock to any secondhand retailers, but that’s not to say these retailers didn’t scoop up stock from Matches’s sale to sell on. Walmart declined to comment (it’s in a quiet period), as did Teneo. Frasers Group and Luosophy did not respond to requests for comment.
It’s not the first time luxury pieces have surfaced on the retailer’s marketplace, where third-party sellers can list items and access Walmart’s expansive customer base. Birkins and Rolexes have been listed by secondhand sellers before. This influx of luxury brands, however, was the most high profile and sprawling, bringing the juxtaposition of high-fashion labels alongside everyday items into the spotlight. It could ultimately ring alarm bells for luxury brands to be wary of online marketplaces.
“To find Jacquemus on a website like Walmart.com that can easily be brought up in search alongside hygiene products or laxatives — words I never thought I’d string next to luxury — feels like the old rules of positioning and context have gone to ground,” says Tank magazine CEO and consultant Caroline Issa.
Luxury inventory on Walmart signals two things, says Globaldata analyst Neil Saunders. First, the market for luxury is slowing down and there is excess stock that needs to be sold. (“This is bound to find its way into all kinds of channels,” adds Saunders). And second, luxury brands are not in full control of where their product is sold.
When brands work with wholesalers, they’ve already given up an element of control. But with the rise of marketplace models, it’s even harder to control distribution than in years past, Saunders says. “Products can, potentially, pop up anywhere,” he says. “This is especially true in an environment where companies go out of business and have surplus stock that needs to be sold on.”
With marketplaces, brands have less control over which wholesalers they work with. As seen in the case of Walmart, a retailer can purchase and offer branded products via one such marketplace (like Walmart). Of course, there are different levels of marketplace offerings: Nordstrom launched a marketplace last month, with the assurance that the products and brands on offer will remain curated. Labels still have to opt in; it’s simply a larger product array.
But by and large, a marketplace shopping experience won’t ever match up to that of a direct purchase from a brand, Saunders flags — especially for luxury. “Brands are not just about the products — they’re also about the whole experience. Someone buying a luxury bag from Walmart is not going to have the same expense as they do buying it directly from the brand.”
At the end of the day, it’s not about Walmart. “Most consumers will see this as odd or mildly amusing rather than thinking too deeply about it,” Saunders says.
It is, though, a marker of a wider phenomenon: third party e-commerce is in a race to the bottom. As consumers seek curation — a proven win for e-tailers — sites are going in the opposite direction.
The race to the bottom
E-commerce is becoming “junkified”, Saunders says. “There are too many players throwing a random assortment of products online to see what works. This has made it harder for consumers to find what they want and make decisions.”
It’s happening because retailers need sales. Oliver Chen, managing director of TD Cowen, agrees: “Financially speaking, there’s rising customer-acquisition costs and churn and you can’t just keep on paying to acquire customers that come and leave. [They] have to want to come back.”
A marketplace model is one solution to this — more stock, (theoretically) broader appeal, without taking on extra inventory. But it’s a risky move at a time when consumers want curation over clutter, Saunders says. “They have a wealth of choice, and they want retailers to edit that choice for them.”
Nordstrom’s newly launched marketplace attempts to balance the concepts of content and curation. In the launch announcement, Miguel Almeida, president of digital and customer experience, said: “Our goal isn’t to be the everything store, but to offer customers more breadth, depth and newness.” Nordstrom’s marketplace will be carefully curated with select brand partners (some new labels, some broader assortments of those already stocked). The company declined to share further comment.
“The danger for Nordstrom and other marketplaces is that they become too confusing and unwieldy to shop. That could be detrimental to the experience. That said, Nordstrom is much more cautious in its approach than many other brands,” Saunders flags. It’s a safer bet than a “more free-for-all affair” like Walmart’s, he adds.
In a retail environment that lacks loyalty, marketplaces are a solid bet — so long as a company already has a lot of scale (as the likes of Walmart and Nordstrom do), Chen says.
But scale and reach only get you so far. In an e-commerce environment where consumers are confronted with hundreds of versions of the same item, it’s difficult to see how more options is the answer.
“The need for curation exists more than ever in an age of algorithms and confusing adjacencies as seen in the current e-commerce landscape,” Tank’s Issa says. “There are bright spots where that happens already and consistently — see independent boutiques and independent publishing — but if overproduction spirals out of control (which feels the case), the unlikeliest of bedfellows will be sure to continue.”
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