Andy Dunn, the originator of the term Digitally Native Vertical Brand (DNVB), the founder of Bonobos, and the head of Walmart’s digital consumer brands unit, revealed last week in a LinkedIn post called “A Love Letter to Walmart” that he will be leaving the retail giant early next year. The post described some of the lessons Dunn learned about retail and leadership over his time at Walmart, as well as his admiration and eventual devotion to Walmart’s mission to “deliver a better life for its core customers.” Walmart returned the love to Dunn with its response, with one of its spokespeople proclaiming “Andy’s contributions to the organization have been invaluable.” The duet of statements was so amicable, it begs the question “why is he leaving?” And Dunn’s seminal role in the last decade of retail’s evolution prompts the thought “what happens now?” As is often the case, the retrospective question is much easier to answer than the forward-looking one.
Neither Dunn’s post nor Walmart’s statement gave much in the way of an explanation for the executive’s impending departure, but it isn’t much of a leap to speculate that it is related to Walmart’s vacillating approach to digital brands. Beginning with the company’s $3.3 billion acquisition of Jet.com in 2016, and continuing with its 2017 buying spree of Shoebuy, Moosejaw, ModCloth, and Bonobos, Walmart’s initial plan appeared aimed at creating an online portfolio of proprietary brands that could compete with Amazon. Once Bonobos was bought, Dunn was tasked with further filling out Walmart’s digital portfolio. But almost right away, things began to change. The pace of Walmart’s acquisitions began to slow and the incubation of new internally-developed private brands became a growing part of the company’s strategy. Dunn seemingly adapted well, helping Walmart to launch its own mattress brand, Allswell, but the sands continued to shift. Reports surfaced earlier this year that Walmart’s ecommerce businesses were projected to collectively lose $1 billion, creating tension within the company. There were rumblings this summer that Walmart was entertaining offers for Bonobos, and ModCloth was sold off this fall. The tone of last week’s statements make it sound like Dunn and Walmart tried their best in good faith, but given his evolving mandate, one could argue it would have been more surprising if Dunn didn’t leave.
Last week’s communications also gave few hints about what happens now. Walmart appears set on its current course of developing and launching new proprietary labels and deploying the learnings it gained from its acquisitions elsewhere in its core business, as it has done successfully with grocery. The future is hazier for Dunn. The closest thing to a clue about his next steps may have been in Walmart’s statement, which said “as an entrepreneur at heart, Andy Dunn has decided now is the right time to take the next steps in his career.” Perhaps he will start a new brand – he’d have no trouble finding backers.
More broadly, Dunn’s symbolic role as a founding father of a generation of startups and the closing of this chapter at Walmart raise the same “what now” question for DNVBs at large. Intense competition and rising customer acquisition costs, problems that likely contributed to Walmart’s changing DNVB game plan, have made it more challenging than ever for digital startups to scale and turn a profit, and investors are getting pickier as these challenges become more apparent.
Perhaps, with the benefits of his vision, notoriety, and experiences grappling with these issues at Bonobos and Walmart, Dunn’s next venture will show us the way. We’ll be rooting for you, Andy.
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