Earlier this month, Marc Lore, the President & CEO of Walmart Ecommerce, said that Allswell—its Casper-like private label mattress and home brand—will make over $100 million in revenue this year. An announcement of this sort is not exactly shocking—You mean the largest retailer in the world knows how to make money from selling its own mattresses and home products? I sure hope so. But it was noteworthy because two weeks earlier Walmart laid off over 50% of the brand incubation team previously run by Andy Dunn, which included Allswell’s team. 

The company is basically saying its new private label will scale to just under one-third of a Casper in two years, in the same amount of time but at a much lower cost and in a much more expensive customer acquisition environment. It did those while cutting the size of the Allswell team in half (there are likely other people within Walmart supporting the brand). Walmart’s recent moves are evidence of the vast power of private labels and the extreme costs of building a digitally-native brand in today’s competitive landscape. Allswell is likely profitable; Casper is not. Allswell likely required a few million dollars to start; Casper raised $340 million.  

As we’ve written before, Walmart’s digital brand strategy over the last few years was a massive, self-inflicted, multi-billion-dollar detour that led it right back to where it should have started: building private label brands that leverage Walmart’s vast audience. And while Allswell is the one success to come out of this entire saga, it still pales in comparison to Target’s new private labels, which are collectively doing billions of dollars in sales annually in a matter of years—Cat and Jack made over $2 billion in its first year. 

With the departure of Andy Dunn, who pioneered Walmart’s ill-fated strategy, along with the layoffs of most of his team and the winding down or selling off of many of digitally-native brand acquisitions, it’s clear that Walmart understands what it needs to do to build modern brands for the next decade. The lesson was painful, time-consuming and expensive, but at least it learned how to do it. Ironically, Walmart had many of the capabilities it needed before it went down this perilous path—the most important one was millions and millions of customers.