Walmart and Gap Join Forces
Gap to Sell Home Goods at Walmart
Walmart (WMT) and Gap (GPS) are teaming up to sell a line of home goods. The line will include bedding and pillows, and will be sold under the Gap Home brand. The products will debut online on June 24. In the future, Walmart plans to sell the home goods at its brick-and-mortar stores also.
The alliance between the two companies underscores how retailers are working on creative ways to stay relevant and increase sales. In recent years, Walmart has started selling higher-end apparel and home goods to appeal to a wider base of consumers. Gap has been trying to revive its iconic brand, and views home goods as a useful way to do that.
Gap’s First Foray Into Home Goods
Gap and other specialty retailers have traditionally stayed away from selling their products through websites and stores which are not their own. They may have wanted to avoid cheapening their brands and/or keep distribution under their control. With competition getting fiercer, many retailers are rethinking that strategy and expanding their distribution partners. For example, many retailers are now selling their products on Amazon (AMZN).
This deal marks Gap’s first foray into home goods. Last year the company signed a licensing deal with IMG, which enables it to expand into home decor, textiles, furniture, and other home goods products. Gap Home products, which will only be sold at Walmart, will be developed in conjunction with IMG.
Walmart Goes High-End
Walmart has been working to build up its apparel and home goods offerings in recent years by adding more premium brands. Despite these efforts, the retailer so far has struggled to launch a hit brand. Earlier this year the firm appointed fashion designer Brandon Maxwell as the executive director of its Free Assembly and Scoop private label brands. It also announced plans to buy ZeekIt, a platform which allows online shoppers to see how clothes look on models with various body shapes.
As consumer habits shift, Walmart and Gap have each faced struggles as they seek to expand into new areas. It will be interesting to see whether their alliance pays off.
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ZipRecruiter Takes Off After Direct Listing
ZipRecruiter’s Public Debut
ZipRecruiter’s (ZIP) shares gained more than 17% in the firm’s debut as a public company earlier this week, boasting a $2.8 billion valuation at the end of its first trading day. The online recruiter is the fourth company to use a direct listing instead of pursuing a traditional IPO this year. The stock opened at $20 per share and ended its first trading session at $21.10 per share.
ZipRecruiter did not go the IPO route because it was not in need of funding. New shares are not issued with a direct listing. Instead, the shares come from existing investors. ZipRecruiter shareholders, including CEO Ian Siegel, offered about 86 million shares in the direct listing.
Other Startups Choosing the Direct Listing Route
ZipRecruiter is the latest in a string of startups opting to issue shares directly to investors. Squarespace (SQSP), Coinbase (COIN), and Roblox (RBLX
) are among other companies that favored a direct listing over a traditional IPO.
ZipRecruiter achieved profitability last year despite a slight decline in revenue. Net income in 2020 was $86 million. That compares to a net loss of $6.3 million in 2019. Since ZipRecruiter launched in 2010, about 2.8 million businesses and 110 million job seekers have used the platform. ZipRecruiter was valued at $1.5 billion in 2018, when it raised $156 million in venture funding.
ZipRecruiter Looks Ahead
ZipRecruiter’s CEO, company executives, and investors including Institutional Venture Partners and Wellington, will maintain control of the company through the Class B shares they were issued. Those shares have 20 votes each. Class A shares, which were sold to the public, carry one vote each.
Looking toward its future as a public company, ZipRecruiter is focused on using technology to reduce the time it takes for employers to hire workers. With schools reopening and people venturing out again, ZipRecruiter thinks it is in a strong position. After all, there are still 16 million people out of work and many more who may be looking to change jobs as the pandemic subsides.
Friday Fundings: Noom, Bowery Farming, and Forter Raise VC Funding
Health and Wellness App Raises $540 Million
Healthy habit app Noom raised $540 million in a Series F round of venture funding. Silver Lake led the investment round, which also included participation from new investors Oak HC/FT, Temasek, and Novo Holdings. Noom uses psychology-based processes to help users monitor and change their daily habits. Demand for Noom’s services surged during the pandemic as people looked for ways to stay healthy and build structure into their days. The startup had $400 million in revenue last year, nearly double its 2019 revenue.
Noom plans to use the money to expand its platform to help users deal with stress and anxiety, diabetes, hypertension, and sleep issues. Noom will also use the money to expand into new markets and to develop employee benefits programs.
Vertical Farming Company Raises $300 Million
Bowery Farming, a vertical farming company, raised $300 million in venture funding. The Series C round was led by Fidelity Management & Research and included many existing investors like GV, General Catalyst, and Temasek. The latest round gives Bowery Farming a valuation of $2.3 billion.
Bowery Farming is among a crop of startups finding creative ways to farm indoors. The company’s produce is currently in 850 grocery stores including Walmart (WMT) and Whole Foods (AMZN). Bowery Farming will use the funding to open more indoor vertical farms across the country and to hire more staff. The startup is constructing a new site in Bethlehem, Pennsylvania, which will be its largest yet.
Ecommerce Fraud Prevention Startup Raises $300 Million
Forter, an ecommerce fraud prevention startup, raised $300 million in venture funding led by Tiger Global Management. The Series F round gives Forter a $3 billion valuation. The startup completed a Series E round in November, raising $125 million. Third Point Ventures, Adage Capital Management, and Bessemer Venture Partners were among the other investors to take part in the round.
Forter applies AI to identify fraud when customers check out online. The startup will use the money to expand into new areas and markets either organically or via acquisitions. One area Forter could pursue with the cash is remediation after ecommerce fraud takes place. Demand for Forter’s services has surged during the pandemic as businesses have grown their ecommerce operations. Analysts expect that many ecommerce patterns are here to stay. This may fuel more growth for Forter.