Revving Up Retail

Walmart e-commerce CEO Marc Lore and Fabletics cofounder Kate Hudson discuss our data-driven future.

As e-commerce continues to show double-digit year-over-year growth in the multitrillion-dollar U.S. retail market, two notable figures in the space—Jet.com co-founder and Walmart e-commerce CEO Marc Lore and Fabletics co-founder Kate Hudson—share with Fast Company’s Robert Safian why being a digitally native company offers a leg up.

It’s a challenging time for retailers. Do digitally native brands have an advantage?

MARCLORE : I think that digitally native brands are the future. Having that direct connection to the customer is very important. Millennial shoppers want to not only buy the product but know where the product’s made, the environmental position of the company, the social impact that the company’s making. And then when you look at the margin structure where you can sell to the entire country from one location, it becomes really powerful financially. You need to do two, three, four hundred million-ish [in revenue], and then you start to generate an incredible profit margin. The problem is it takes a lot of capital to get [there] as a single branded retailer. Once the venture community starts to appreciate that it’s a lot of capital up front but then huge upside, you’re going to see a lot more money being pumped into that area.

KATE HUDSON : Connection is everything. If you have both the online and the physical retail, [it creates] a two to three times more valuable customer.

ML : Yes, we’re finding at Walmart that when people shop both online and in-store, they shop twice as much. When we get people who shop only in-store to shop online, they actually buy more in the store after that.

Kate, Fabletics has an unusual model in that it’s membership-based, right?