Walmart’s Andy Dunn Believes E-Commerce Isn’t Enough

Tim Denman
Editor in Chief
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Andy Dunn sold Bonobos to Walmart two years ago and is currently the SVP of digital consumer brands for the mega retailer.

Andy Dunn helped kicked off RetailX this week with some provocative statements on the state of e-commerce and where he felt the industry is headed.

Following his keynote address, that preceded the opening of the show floor at the newly launched mega trade show, the founder of Bonobos and current Walmart SVP of digital consumer brands sat down with me for an exclusive interview.

Rather than asking him to retell his well-documented Bonobos story, I simply asked him to expand upon some of the most thought provoking positions he took during his 30-minute keynote.  

Highlighted below are Dunn’s statements during his presentation with his follow-up comments conveyed to me after exiting the stage directly underneath them.

“E-commerce doesn’t work without brick-and-mortar.”

When we think about really big scale impacting not just millions but tens of millions of customers it works better if you’re omni. First and foremost customer wise, but also from a P&L standpoint.

What we were able to do with the brands we are building is leverage the whole ecosystem and put maybe 5% to 10% of the capital into the brand that would be required if it was pure e-com. We are able to leverage all the power of brick-and-mortar distribution and all the awareness that goes with it.

Everyone in e-commerce talks about customer acquisition costs compared to lifetime value. In reality there is no better way to cover customer acquisition costs that through selling in stores.

If we could go back and do Bonobos again we would do the same thing. We would launch stores earlier. If we understood the Guide Shop model and the opportunity to do lean inventory, experiential, high productivity retail we would much rather of done that in year one or two.

We see better customer experiences merge with better business models when we try to do it together. I think we are coming from an era where it has been about e-commerce disrupting legacy brick-and-mortar. What I have realized as a Walmart employee for two years is that direct to consumer alone is not the most exciting thing. It is bringing that DNA and building what we are calling Omni Direct to Consumer Brands.

“Internet retail doesn’t make money.”

What I have seen for example is Walmart is making a lot of profit, paying a lot of taxes, and a lot of disruptors are coming up and raising capital, and not generating a lot of returns. I don’t think that endures.

At some point people will move away from valuating enterprises on revenue growth and potential, to valuating enterprises on operating income. We feel fortunate coming into an enterprise where there is this great history of profitability, bringing some growth assets into it, and then figuring out how we not only grow quickly but make money as we grow.

In the private markets, tons of venture capital has flowed into direct to consumer. Those assets are going to need to find a home. I think they are going to find a home by generating profit and becoming some of the next public companies, or by finding ways to join other enterprises and become part of organizations that are measured by profit.

Since Bonobos was acquired two years ago we are seeing M&A activity pick up in multiple categories. I think we will increasingly see pressure for the private direct-to-consumer brands to figure out how to be a part of that money making equation going forward.

“Selling other people’s stuff is a race to the bottom, you have to make your own.”

I think it is going to be hard to win without having proprietary products and experiences. If everyone else is competing on the same brands, and the customer, particularly through online models, is getting better and better at finding the best price, prices will just keep going down and marginal profits will be super thin.

When you have your own brands you have vertically integrated margins. Equally importantly you have stuff that customers can’t find anywhere else. It is a win/win. Now customers are coming to you for brands they can’t go somewhere else to get, and when they get there those brands are effectively operating on in-house margins.

I think this is where the Netflix analogy fits in. Less than 20% of their content is now their own, but 90% of their customers are engaging with Netflix proprietary content. Sometimes it is instructive to look to other industries. The future of commerce might look a little bit like the history of content.


RetailX launched this year. The new tradeshow concept co-located three established events ― Internet Retailer Conference and Exhibition (IRCE), GlobalShop, and RFID Journal Live! Retail ­― in one common showfloor with separate education tracts.

RetailX attracted more than 1,000 exhibitors and 15,000 attendees for its first-ever conference. The event was held at the McCormick place in Chicago and early plans are for the event to again make the conference hall its home in 2020.

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