Fast Five Shorts | Is The Third Time The Charm For Buybuy Baby?
In the latest edition of Omni Talk’s Retail Fast Five, sponsored by the A&M Consumer and Retail Group, Mirakl, Simbe, Ocampo Capital and Scratch Event DJs Chris Walton and Anne Mezzenga are joined by special co-host and Shoptalk and Groceryshop’s VP of Original Content and Strategy Ben Miller. In this clip, the group discusses: If The Third Time's The Charm For Buybuy Baby
For the full episode head here: https://youtu.be/ySon4C9S-hQ
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Transcript
Beyond buys Bye bye Baby for $5 million according to retail dive.
Speaker A:Beyond Inc.
Speaker A:Has entered an asset purchase agreement to acquire the global rights to buy By Baby.
Speaker A:The Buy by baby brand for $5 million, which reunites the brand with the former with its former corporate parent Bed Bath and Beyond.
Speaker A:Beyond is attempting to grow the Baby in apparel and accessories brand with a three part strategy.
Speaker A:Wait for this folks.
Speaker A:The first prong relies on Beyond's October partnership with Kirkland's which allowed for the opening and operation of up to five small format Bed Bath and Beyond stores.
Speaker A:The second and third parts entail two offerings beyond is exploring with fintech company Tzero which holds a special purpose broker dealer license, including the tokenization of some of Best of Bye Bye Baby's intellectual property.
Speaker A:Whoa.
Speaker A:Okay, pay attention here folks, because then it now it starts.
Speaker A:If you weren't complicated, if it wasn't complicated already, it's going to get even more complicated.
Speaker A:Really.
Speaker A:But it's important.
Speaker A:Beyond wants to offer digital dividends to current holders of beyond and make an offering of new investors who want to want a share of the Bye Bye Baby ip.
Speaker A:The goal is for the token to provide a revenue share on the brand's omnichannel revenue along with loyalty benefits across Beyond's platform.
Speaker A:Additionally, T0's blockchain technology could enable Bye Bye Baby to create a digital wallet that holds both financial assets and personal records like birth certificates, medical records and life milestones.
Speaker A:Holy cow.
Speaker A:And are you excited that Bye Bye Baby is getting what is now a third life and in the way it's being described?
Speaker B:Ben, I think we need your accent here to do the correct Monty Python.
Speaker B:It's not dead yet.
Speaker B:I'm not dead yet.
Speaker A:That's exactly what I thought of when I wrote that.
Speaker B:I don't know, Chris.
Speaker B:Like, I just, I've tried with the Buy Bye Baby concept as, you know, with babies rust.
Speaker B:Like I'm trying to really dig deep and find something that a reason for being for these companies and I'm just really struggling to, to do that.
Speaker B:I just don't know that there's a reason for Bye Bye Baby anymore.
Speaker B:I feel like, especially in another superstore format, I just, I think that we've all just without having a consistent retailer in the space for the last couple of years, I think that the traffic's just moved to other mass retailers where they can get some of these things and then back down to specialty retailers.
Speaker B:Like if you really want that unique buy, try before you buy experience.
Speaker B:I think we've just we're just seeing this happen so much better in some of the specialty retail stores.
Speaker B:And lastly this whole blockchain thing with the birth certificates thing.
Speaker B:Like I just, I'm not an expert on that stuff but I just don't see myself as a parent going to buy my baby to store birth certificates and financial information like that is just a bridge too far.
Speaker B:But, but I could be alone on this island.
Speaker B:I don't know where you two fall.
Speaker A:Well, well, Ben, let's find out.
Speaker A:What are you thinking?
Speaker A:I'm curious what you think of the deal too, like if you got any thoughts on that.
Speaker C:And I think that's where I've been spending a bit of time.
Speaker C:So Chris, I'll let you talk about some of the merchandising elements because there's, there's that you, there's a whole right to play question.
Speaker C:Yeah, I'm not sure and I completely agree.
Speaker C:The competitive landscape has completely changed and it's only got harder.
Speaker C:So what's the reason?
Speaker C:So it's really, really easy to be very, very cell, cell baby on this.
Speaker C:The thing that I'm looking at is what does it mean for beyond?
Speaker C:So I kind of, yeah, went back to the figures, listen to the Q3 statement.
Speaker C:You know, beyond as a vehicle is not really working at the moment.
Speaker C:So revenue is down 20 odd percent.
Speaker C:It's still a billion dollar retailer.
Speaker C:But EBITDA is negative, traffic's down, average order frequency is down, average order value is down.
Speaker C:So this creation isn't delivering.
Speaker C:If you're a billion dollar retailer and all your indices are running in the wrong direction, 5 million is a pretty low risk gamble to make.
Speaker C:And if that adds a whole another category into your store, another reason to visit, another opportunity to have a bit of footfall, I can't quite see why not.
Speaker C:But I mean it's a pretty negative place to be from to do it.
Speaker C:But I kind of feel it's worth a go.
Speaker C:And even when you look at in the details of the transaction, one of the things that they're also buying is the data and a database.
Speaker C:So is there, there might be $5 million worth of customer and transactional data in there alone.
Speaker C:So look it, I think, I think it's worth a go.
Speaker C:Even, even at a top line doesn't excite.
Speaker A:Yeah, I think those, I think, I think those are great points.
Speaker A:I 100% agree with you.
Speaker A:I mean in a lot of ways it feels like a steal.
Speaker A:$5 million is just super cheap at the end of the day and you're Right, Ben?
Speaker A:Because there's the online portion and then there's the store portion.
Speaker A:And the online baby business is a, is a, is a big business.
Speaker A:Like a lot of people buy their products online, they register online, you get that data.
Speaker A:And so bringing that into the fold and even the SEO value of Buy Bye Baby as a destination to shop has to be incremental to beyond.
Speaker A:And I have to think that alone is worth $5 million.
Speaker A:Then you get the option value of potentially going into stores through Kirkland or through standalone stores should they want to in key markets too, where they know the concept could still work.
Speaker A:Because I, because I imagine they know how to run this better than the previous acquirers knew how to run a retail store as well.
Speaker A:Because, you know, their CEO has a lot of experience.
Speaker A:I mean, I think he owns Camping World or did at least at one time as well.
Speaker A:So he knows the retail business.
Speaker A:So I think if anything too.
Speaker A:Last point I make, I think when I, when I hear you talk about it, Ben, I feel like it's kind of an indictment that why weren't more people in this bidding race, you know, like why, why didn't more people want to take on some element of this for $5 million, like if I'm, if I'm Target or Walmart, I would just buy it to protect.
Speaker B:Well, those two make sense, I think.
Speaker B:But just because it's cheap, does it mean that you should buy it and then it should especially.
Speaker B:I mean, I can get it on board with the, with the online bit that you're talking about, Chris, but I really have a hard time with.
Speaker B:It doesn't even make sense to put into a Kirkland store.
Speaker B:Like, it just seems like a very disjointed experience to me to like have baby pop up in there.
Speaker B:And does that further degrade your Kirkland's home business when you're starting to throw random stuff in the back of it?
Speaker B:I don't know, but.
Speaker A:Well, I don't know that.
Speaker A:That depends on the execution.
Speaker A:Right, But I think like you said, that's the option value, the, the online value, you know, the online non term.
Speaker A:I got to think the online long term value of this business is more than $5 million in cash flow, but I don't know.
Speaker B:Yeah.
Speaker B:All right, Ben.
Speaker C:I guess the other thing, and I completely agree about the juxtaposition that it could be about putting into the wrong place and that's, that's kind of where the merchandising.
Speaker C:Right.
Speaker C:Right to play is.
Speaker C:But I think what I am mindful of is, you know, Dave.
Speaker C:Yeah.
Speaker C:They've brought back the Overstock brand name so that they have the Overstock platform.
Speaker C:They bought Zulily again for, for kind of short term deals.
Speaker C:They've got the Bed Bed Bath brand as well.
Speaker C:What that gives is a number of outlets to be able to move inventory around.
Speaker C:So they've got, they've got the routes to be able to sell inventory in case it's not working, or to be able to move some and to be able to add extra categories across Overstock and into Zulily.
Speaker C:I kind of.
Speaker C:That.
Speaker C:I can see that.
Speaker C:I think if, if we're talking $25 million, I think it'd be very different, but for 5 million, it's worth a go.
Speaker B:Yeah, fair.
Speaker A:It's worth a go.
Speaker B:It's worth a go.
Speaker B:It's worth a go.
