Walmart's Online Retailers See $2 Billion in Losses

With a market value of over $333 billion, Walmart (NYSE: WMT) has generally performed well in the retail industry, but the company's e-commerce space has been taking a hit.

While Walmart's overall shares have risen about 20% over the past year, their e-commerce brands continue to face restructuring due to declining sales.

Third quarter was the strongest fiscal quarter for Walmart, with even online sales up 41%. However, Q3 wasn't enough to save the fiscal year when it came to the company's digital landscape.

Despite Walmart's strong overall growth, the company's e-commerce sales ultimately were down last year. In fact, Walmart saw $2 billion in e-commerce losses during 2019.

Several of Walmart's digital brands have been facing layoffs and restructuring as a result, and that trend continues.

Allswell, Walmart's "first homegrown digital brand," is one brand currently seeing layoffs. Effective April 24, 2020, 29 out of 56 employees will be officially laid off from Allswell's New York City office.

"Our incubation strategy was designed to create unique brands that reach niche customer audiences," said a Walmart spokesperson to Retail Dive, regarding Allswell. "We're integrating many of these brands as private brands within Walmart as we continue to deepen our category expertise and strengthen our ability to offer customers a larger range of products. Walmart will continue to sell Allswell's mattresses, bedding, and other products online at allswellhome.com, on Walmart.com and in Walmart and Sam's Club stores."

Hayneedle is another of Walmart's digital brands whose workers have been hit with layoffs recently.

Roughly 200 employees of the online retailer are being laid off. About 240 employees were laid off last May. After last year's cut and these upcoming layoffs, Hayneedle's call center will be down to only 100 workers.

Walmart's Bonobos, which specializes in menswear, hasn't been immune to the hits either. Last year, several dozen employees were laid off.

Bonobos founder Andy Dunn, who also served as Walmart's senior vice president of consumer brands, ended up leaving Walmart late last year, having joined after Walmart acquired Bonobos. Dunn oversaw Walmart's launch of Allswell in 2018.

Even with recent e-commerce sales declines and subsequent changes, Walmart's intention behind launching its digital brands still seems sound enough, considering that is the direction of modern commerce. Time will tell if their decisions now will pay off down the road.

According to Hilding Anderson, a Publicis Sapient retail consultant, "The measure of success is whether they are going to be thriving in 10 years."