Last year, Walmart spun up a new team tasked with creating new ways to differentiate from Amazon in the long term. One answer: Incubating and acquiring digital-native brands that have direct relationships with customers and appeal to younger generations of shoppers — and won’t be sold on Amazon.
Today, the world’s largest brick-and-mortar retailer has taken a small step in that direction by agreeing to acquire Eloquii, a four-year-old startup that makes and sells its own line of plus-sized women’s fashion primarily through its own website. Eloquii also sells through five of its own stores, as well as online services like Dia&Co and Stitch Fix.
Financial terms of the deal were not disclosed, but a person familiar with the acquisition said Walmart will pay $100 million for Eloquii, or about 2.5 to three times annual revenue. Eloquii CEO Mariah Chase and her 100 employees will join Walmart’s e-commerce division and report to its head of digital consumer brands Andy Dunn, who sold his menswear brand Bonobos to Walmart last year for $310 million.
In Eloquii, Walmart is betting on one of several emerging direct-to-consumer brands helping to modernize the $21 billion plus-sized clothing market by building fashion labels focused exclusively on serving the needs and fits of those women who wear size 14 and larger. By some estimates, more than half of all U.S. women are in that size range.
“We got excited about this problem,” Walmart’s Dunn told Recode in an interview. “[The plus-sized market] has been dramatically underserved and there’s an amazing opportunity to go and bring delight to it.”
The Eloquii brand was first created by traditional retailer The Limited in 2011 but was discontinued just 18 months later. A team of employees, with the help of an outside investor, bought the brand and relaunched it in 2014.
Since then, the startup raised $42 million in venture capital to pursue the opportunity in one of the fastest-growing segments of fashion. Chase told Recode that she had considered raising more financing to remain independent but was attracted to Walmart’s commitment to nurture innovative digital brands.
“When you’re a business that had raised venture capital, selling the business is not necessarily an existential question, especially as you mature,” she said. “The question really comes down to timing and partner. And for us, that all kind of gelled with Walmart.”
Inside Walmart, Eloquii will sit alongside Modcloth and Bonobos — two other digital-first brands Walmart brought in through acquisition. Walmart also created a new mattress brand called Allswell that competes against bed-in-a-box startups like Casper and Tuft & Needle.
While it would seem obvious that Walmart would want to expand Eloquii’s reach by selling its clothes through Walmart.com or its millennial-focused subsidiary Jet.com, Dunn said that hasn’t yet been decided. His own brand, Bonobos, will eventually be sold through Jet.com but still isn’t on the site 15 months after acquisition.
“That wasn’t the basis for transaction,” he said of the Eloquii deal. “For us the real value here is in owning a great brand that enables us to have that proprietary product and experience.”
This article originally appeared on Recode.net.