It is widely reported Bonobos is profitable (though I imagine just barely), and it is widely reported walmart.com is not profitable. In this instance the primary reason for the acquisition was not about margin. It is about category expertise. The benefit to Walmart is the growth the Bonobos talent will bring to the men's apparel category at Walmart and not the growth that Walmart will bring to Bonobos.

Another pillar of growth that has to happen for sustained profitability in e-commerce (and you will see continued growth of it in brick and mortar) is the development of private brands/store brands/owned brands (referred to as "store brands" from here). Store brands are more profitable for two reasons. First, manufacturers are commoditized with the production of store brands because it is a classic one-to-many relationship. Retailers hold the power over manufacturers because there are many manufacturers to choose from for production. Second, with store brands it is much easier to control prices because there is no direct competition. For example, there is no direct price comparison to Banana Republic jeans from other retailers because no other retailer carries Banana Republic jeans. In contrast, if Walmart lowers its retail price on Pampers diapers, Amazon carries the exact same Pampers diapers and will lower retails to follow Walmart. This results in margin compression for both Walmart and Amazon.