Outside Business Journal

Why Brands Quickly Changed Their Minds About Selling on Walmart.com

Outdoor industry leaders shine a light on the crux of the issue—that selling on the "cheapest retailer's" website changes consumer’s perception of brands, putting specialty retailers at risk

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It’s safe to say American shoppers don’t go to Walmart looking for top-of-the line backpacks, winter expedition apparel, and mountaineering gear. But the big box discounter challenged that assumption with the launch of a premium outdoor store last week.

“When’s the last time you bought something nice from Walmart?” said Wes Allen, owner of Sunlight Sports in Cody, Wyoming.

As Walmart continues to build its online marketplace in an attempt to keep up with Amazon as the sell-everything search engine, outdoor industry leaders say that brands can no longer ignore Walmart as part of their omni-channel strategy. They now need to decide if they want to be a pawn in the game.

Sure, individuals at the company might have a genuine interest in the mountains—Greg Penner, chairman of the Walmart board of directors, reached the summit of Mt. Everest this summer. But since 2016, Walmart in its race with Amazon has been adding  inventory and brands by the thousands through third-party sellers. You can browse $200 handbags and upscale beauty products on the site—something you can’t do in stores. In 2017, Walmart acquired a number of brands: the men’s line Bonobos, hipster women’s clothing site Modcloth, and Moosejaw, a reseller of some of the best brands in the outdoor industry. As expected, Walmart gained access to those and stocked its “curated by Moosejaw” store with nearly 50 different brands, from Black Diamond Equipment to Deuter.

For a store built on a foundation of bottom-of-the-barrel prices and quality, many people commented that it makes no sense for Walmart to sell the best of the best. Amazon has prioritized pricing and selection, but others made the argument that if brands sell on Amazon, why wouldn’t they sell on Walmart.com?

Deuter products available on Walmart.com
Deuter backpacks were on sale through Walmart.com when the premium outdoor store launched on August 27. But products were taken down by the next week, at the request of Deuter. (Screenshot: Walmart.com)

Who Withdrew?

What was appealing about the deal, according to insiders, was the chance to control third-party sellers and distribution, and list products online at full MSRP. No discounts. It’s important to note that Moosejaw is still a well-respected retailer in the industry, despite its new parent, and brands were willing to support them. But some brands quickly realized that selling on the Walmart-branded platform immediately shattered trust with specialty retailers, some of whom halted orders, and with consumers who define their image by where they shop.

“Many brands are not playing a particularly long game here,” said Mike Massey, founder of Locally and owner of Massey’s Outfitters. “It took them 30 years to build their goodwill and reputation with consumers and making the wrong decision here with their intellectual property is like flipping a coin with the future. There’s a lot of large companies who would be happy to cash that goodwill in for one great quarter.”

While $200 Deuter backpacks and $100 Black Diamond harnesses were on the microsite, some feared that, based on Walmart’s decades-old status, prices would eventually drop or products would be thrown into the mix on shelves in stores.

“For retailers, we’re ordering product a year ahead, based on product selection and brand positioning. We’re taking delivery of it now for fall and betting our livelihoods that we’re going to be able to sell it for enough money to pay rent, pay employees, maybe put our kids through college,” Allen said. “You build relationships with people you trust that sell you things. Then somebody opens in Walmart, with no explanation. Your order ships next week. Would you still take that order? A brand’s worth has to do with how people feel about it.”

A little more than 24 hours after the launch, the fallout began. Black Diamond was the first to respond. The company sent a cease and desist notice demanding Walmart stop using logos and product images on the website. In the days following, Deuter, Katadyn, Leki, Yakima, Native Eyewear, and Therm-a-rest changed their minds about being sold through Walmart.com.

Shawn Hostetter, president of Katadyn North America, said, “We made this decision after listening to the retailers we partner with—in doing so it became clear we needed to remove our brand and products from Walmart.com to best support their needs and to best caretake our premium brand position.”

At the time of publication, Craghoppers, Klymit, Grand Trunk, Orca Coolers, PacSafe, Tentsile, Teton Sports, ExOfficio, and 18 others were still listed on the site.

Moosejaw’s Response

Eoin Comerford, CEO of Moosejaw and general manager of outdoor at Walmart e-commerce, in a LinkedIn post on Friday addressed concerns. He said that if the outdoor industry wants to advance beyond being exclusionary and dominated by a few large retailers, then they have to adapt to new ways and keep an open-mind. The retailer is known for not taking itself too seriously and because of that, according to Comerford, it has attracted beginner outdoor enthusiasts intimidated by the industry’s elitism.

“I wasn’t naïve enough to think that all outdoor retailers would welcome the Premium Outdoor Store with open arms, but I am surprised by the vehemence of attacks by some of our industry’s leading retailers and the threats to drop brands that participated,” Comerford wrote.

Diversity, equity, and inclusivity have been leading topics in the outdoor industry. As a whole, the predominantly white and predominantly male industry is trying to figure out how to welcome and include more diverse populations.

Comerford said that in launching the store, he kept in mind how it would expose outdoor brands and activities to a massive audience, including underrepresented groups. In its response to Black Diamond, Walmart’s statement said: “At a time when the outdoor industry is working hard to expose more people to the amazing experiences they can have outside, we feel like [having a premium outdoor store is] a really positive development.”

However, others in the outdoor industry see it as a tactic. Rich Hill, president of Grassroots Outdoor Alliance, a consortium of more than 60 independent outdoor specialty retailers and more than 60 vendor partners, believes that the new site will not reach any new customers.

“Not a single new climber will discover their love of the sport through Walmart.com,” Hill wrote in an email. “It’s just expanding the number of locations customers can search for a lower price.”

Sunlight Sports
Sunlight Sports in Cody, Wyoming, is considered one of the top specialty outdoor retailers providing quality service and gear to shoppers. The store won Grassroots Outdoor Alliance’s 2018 Retailer of the Year Award. (Photo: Courtesy)

Walmart’s Specialty Veneer

In a continued effort to give consumers a special experience—walking through the front doors and feeling at home or stoked on adventure—retailers strive for quality customer service. Some, like Summit Hut in Tucson, Arizona, even rearrange their shops to guide shoppers through each brand’s stories. And with the rise of social media, brands are using storytelling to connect with fans. Think Patagonia’s Worn Wear and Merrell Magic.

Large corporate structures are trying to harness that magic and contribute by providing supplies needed for those premium experiences. Allen says that big box conglomerates—such as Camping World Holdings buying beloved retailers Erehwon and Rock/Creek Outfitters—are attempting to engage shoppers in their hearts and emotions like specialty does.

“I totally get it—it’s flattering,” Allen said. “The environment that created that desirability needs to be protected if it’s going to survive. You can’t just rip it up by the roots and throw it out on a Walmart shelf and hope it survives. We need to safeguard this thing and water it.”

Hill said that any brand that chooses to do business with Walmart has become irrelevant with specialty retail, REI, Backcountry.com, or even their own DTC strategies.

“I see it mainly as a desperate move by brands that cannot see a path forward other than to get in bed with the most dangerous retailer on the planet,” Hill said.

And Massey said the most important thing brands can do is apply some of the same lessons they’ve learned in brick and mortar to online, and make sophisticated decisions about how they want their products merchandized online.

“Most would never tolerate their merchandise shipping into Costco simply because lots of customers go there, but some might,” Massey said. “And, on the other hand, just because someone is a dealer for your products in Waco or Bend doesn’t mean they should automatically be allowed to sell them online. Having no channel strategy is the worst-case scenario. It’s like trying to open 15 dealers in the same mall and hoping for the best.”

If retailers and brands have learned anything about selling through Amazon and developing an omni-channel strategy, it’s that they have to consider it from all angles. And now Walmart is part of that sphere.