Men’s Fashion Startup Bonobos Sells To Walmart; Consumers Revolt – Forbes
Hereâs an interesting aspect of making a major company announcement on Facebookâthe reactions to and comments on postings make it stunningly easy to gauge consumer response. This weekâs announcement by men’s online clothing line Bonobos is a case in point. On Friday, June 16, the company announced an agreement to be purchased by Walmart for $310M, citing Walmartâs intent to energize its e-commerce channel in an attempt to mirror Amazon, according to the New York Times.
âWe understand this news might come as a surprise, but know that everything that makes Bonobos the brand that it is will stay the same,â the company said in response to the posting. âEverything from our product quality to our customer service and we wonât be selling at Walmart stores or online. We believe that with Walmartâs scale, weâll be able to create efficiencies and an evolved shopping experience that benefits you, our customers.â Audience reaction to the post and explanation: Anger, shock, sadness and laughter outnumbered âlikesâ by a factor of 2 to 1.
This remark articulated the feelings of the majority well: âWe all get that this was a move based on economies of scale. But it’s also a move that your loyal customer base sees as the ends justifying the means. You’re joining an organization that millennials, your core consumers, loath and vilify as destructive, unethical, and cheap – essentially the polar opposite when previously thinking about Bonobos. In doing so you’ve alienated the voice of your customer–that which heavily contributed to the Bonobos brand initial success. In the mind of the consumer, the connection has been made and the perspective of quality tarnished.â
Wow. Now what? Taking a page from the recent Juicero playbook, Bonobos founder Andy Dunn responded personally in a post on Medium.com. He spoke of his background as the son of a mother who immigrated from India. He talked about the experience of graduating business school $150,000 in debt. He shared the inspiration that led to the creation of Bonobos in 2007. Customer service ninjas. A model for 1-to-1 service. He spoke of his admiration for Marc Lore, the founder of Jet.com who now heads Walmart e-commerce following Walmart’s acquisition of Jet, and of the chance to take all that he and Lore have learned to a âwider ecosystem that we have helped to create and come to love.â
His statement was passionate, committed, humble and â¦ all about him, as it spoke to all of the noble reasons he would make the surprising move to allow his highly regarded brand to be acquired by its seeming opposite. It was also a bit of a bait and switch, beginning with a headline of âThe Future of Brands,â followed by the more accurate sub-title âThe Future of Bonobos.â
Dunn’s post received a less vehement reaction than the initial announcement on Facebook. In the 24 hours since posting, his missive has produced 64 likes and 10 comments. The first response however, was dunning (pardon the pun): âTLDR [Too Long Didnât Read]: I thought about having integrity, and then I said nah screw it. Iâm selling out to one of the worst companies in America for $310 million.â
The marketâs response was daunting as well. Walmart stock plunged 4.6% to 75.26, although it is important to note that in a move that can only be described as bad timing, the acquisition news fell on the same day as Amazonâs acquisition of Whole Foods, sending grocery stocks into a spin. Amazon rose 2.4% to 987.71. Whole Foods rocketed 29.1% to 42.68. In comparison to other discounters with grocery divisions, Costco declined during the day by 7.2%, and Target lost 5.2%.
In all, Bonobos has made a strategic PR error in its announcement and follow up by failing to acknowledge and speak to the sensibilities of the millennial audience that comprises its base. Their vehemence should not have been a surprise, as speculation of the news has been predicted by Recode since April. While the benefit of the acquisition to Walmart is obvious, observers responded with immediate worry about the damage to Bonobos of affiliation with Walmart’s troubled brand. Bonobos has had ample time to consider the ramifications of brushing off the concerns of its socially conscious millennial base.
While market economics may improve Walmartâs e-commerce position in the long term and even introduce efficiencies that eventually recover and expand the Bonobos market, the âbrand ethosâ of responsibility, caring and integrity of business is gone. Can the brand recover from this PR misstep? Time will tell.
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