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Here’s who Amazon and Walmart might acquire next

Foursquare used its location intelligence to analyze brick-and-mortar foot traffic, and then speculated on which companies Amazon and Walmart may look to acquire, Jeff Glueck, Foursquare’s CEO, said in a company blog post. This speculation follows Amazon’s upcoming purchase of Whole Foods and Walmart’s e-commerce acquisition spree.

Amazon could be looking to make acquisitions that would further its connection to its current customer base, and help build out its omnichannel options. Here are the companies Foursquare identified as potential targets for the e-commerce titan:

  • Nordstrom. Foursquare found the department store’s shoppers are nearly two times more likely to shop at Whole Foods than the average consumer. That means a pair-up with Nordstrom would afford Amazon another channel through which to reach these customers, strengthening their loyalty and facilitating access to more of their data. Acquiring Nordstrom would also help Amazon build out its brick-and-mortar presence.
  • Warby Parker. A whopping 80% of eyeglasses company Warby Parker’s shoppers also shop at Whole Foods, and 55% of them are millennials. Amazon has made a variety of plays to get into apparel, so investing in glasses could be an extension of that.
  • Lowe’s. Despite the advent of e-commerce, home improvement companies like Lowe’s and Home Depot have seen continued brick-and-mortar success — Foursquare found they’ve both experienced double-digit foot traffic growth over the past year. Lowe’s in particular has a loyal customer base, and could represent a seamless move into the home improvement market for the online retailer, as it is already omnichannel focused.

Walmart, Foursquare believes, wants to use acquisitions to reach new consumers and widen its appeal. Interestingly, while their motives may be different, there’s some overlap between potential acquisitions for Walmart and Foursquare’s picks for Amazon:

  • Nordstrom. Nordstrom shoppers are 55% less likely to shop at Walmart than the average US consumer, meaning an acquisition would give the company access to tons of new customers.
  • Warby Parker. Warby Parker customers are 80% less likely to shop with the retailer, and its strong millennial base would be a major win for Walmart. The generation spends $600 billion annually, and accounts for 28% of daily per-person consumer spending.
  • Ulta. The beauty retailer’s customer base is extremely loyal, as 15% of Ulta visits are made by shoppers who make 12 or more visits a year, but about half of the company’s shoppers are Walmart averse. An acquisition would allow Walmart to reach these shoppers and benefit from their loyalty.

While these possibilities are purely speculation, the two companies are likely to make more purchases going forward. Many executives expect retail M&A to continue to accelerate, and these titans have the cash to take advantage of a ripe landscape. To be sure, Amazon and Walmart will spend the foreseeable future trying to best each other, and acquisitions will probably remain a large part of that battle.

Brick-and-mortar retailers are caught on the wrong side of the digital shift in retail, with many stuck in a dangerous cycle of falling foot traffic, declining comparable-store sales, and increasing store closures. Over 8,600 retail stores could close this year in the US — more than the previous two years combined, brokerage firm Credit Suisse said in a recent report. Meanwhile, e-commerce pureplays are riding the rise of digital commerce to success — none more so than Amazon, which accounted for 53% of online sales growth in the US last year, according to Slice Intelligence.

In response, many brick-and-mortar retailers have started to use omnichannel fulfillment methods that leverage their store locations and in-store inventory in order to better compete in e-commerce. These omnichannel services, including ship-from-store and click-and-collect, can help retailers manage the transition to digital by:

  • Increasing online sales by offering cheaper, more convenient delivery options for online shoppers.
  • Limiting the growth of shipping costs as online sales volumes increase by leveraging store networks for delivery.
  • Keeping stores relevant by turning them into fulfillment centers that pull customers in to pick up online orders.

However, few retailers have mastered these new fulfillment services. While these companies have spent years optimizing their supply chain and logistics networks for delivering goods to their stores or directly to customers’ doorsteps, most have yet to figure out how to profitably bring their store locations into the e-commerce delivery process.

Jonathan Camhi, research analyst for BI Intelligence, Business Insider’s premium research service, has laid out the case for why retailers must transition to an omnichannel fulfillment model, and the challenges complicating that transition for most companies. This omnichannel fulfillment report also detail the benefits and difficulties involved with specific omnichannel fulfillment services like click-and-collect, ship-to-store, and ship-from-store, providing examples of retailers that have experienced success and struggles with these methods. Lastly, it walks through the steps retailers need to take to optimize omnichannel fulfillment for lower costs and faster delivery times.

Here are some of the key takeaways from the report:

  • Brick-and-mortar retailers must cut delivery times and costs to meet online shoppers’ expectations of free and fast shipping.
  • Omnichannel fulfillment services can help retailers achieve that goal while also keeping their stores relevant.
  • However, few retailers have mastered these services, which has led to increasing shipping costs eating into their profit margins.
  • In order to optimize costs and realize the full benefits of these omnichannel services, retailers must undertake costly and time-consuming transformations of their logistics, inventory, and store systems and operations.

 In full, the report:

  • Details the benefits of omnichannel services like click-and-collect and ship-from-store, including lowering delivery times and costs, and driving in-store traffic and sales.
  • Provides examples of the successes and struggles various retailers have experienced with omnichannel delivery.
  • Explains why retailers are having trouble managing costs with their omnichannel fulfillment efforts, which are eating into their profits.
  • Lays out what steps retailers need to take to optimize costs for their omnichannel operations by placing inventory where it best meets customer demand.

Source: BusinessInsider

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