Walmart vs. Amazon: Who’s Winning and Why?
Since its creation 23 years ago, Amazon has disrupted the world of traditional retail in its successful fight to be the leader in commerce. Yet it had one competitor to face and still does to this day. Walmart has dominated the world of retail for years while its revenue overtakes all others, soaring to $485.3 billion over the course of 2016. While Amazon’s fiscal imprint was smaller at $136 billion, these two retailers continue to battle for top commerce maven. So who’s winning and why?
A Diversified Marketplace
Doug McMillon, Walmart’s CEO since 2014, has been working to transform Walmart’s e-commerce business . After purchasing jet.com for $3.3 billion in 2016, McMillon placed Jet’s chief executive Marc Lore as head of Walmart’s overall e-commerce. This acquisition placed Walmart in a position to dive headfirst into a transformation of its online shopping.
Lore introduced appealing incentives for online shoppers, including free 2 day shipping and 14 million new online items. Walmart is also introducing more efficient buying strategies between store and e-store, using brick-and-mortar techniques to keep prices low online.
Amazon is also breaking barriers between e-commerce and brick and mortar stores by the aggressive purchase of Whole Foods for $13.4 billion in 2016. Amazon now takes on a physical presence for shoppers across the 460 Whole Foods locations in the U.S. Jeff Bezos, CEO of Amazon, is adding to Amazon’s offline interests and directly impacting Walmart through its newfound presence in food business.
The acquirement of Whole Foods’ locations was a big step for Amazon’s reinvention of shopping on and offline. However, Walmart’s massive physical presence of over 4,500 stores means that 90% of the U.S. population is never farther than 10 miles away from these super-centers. Each retailer now holds critical spaces in both sides of commerce.
Changing Customer Profiles
Lore’s work to add to Walmart’s e-commerce business has meant the acquirement of a number of successful online retailers. This includes Jet, Bonobos, ModCloth, Shoebuy, and Moosejaw. Lore is using these retailers to reinvent Walmart’s internet footprint and make the top retailer digitally savvy.
Importantly, the addition of these businesses to Walmart means new customers. Traditionally selling to budget friendly shoppers, Walmart can now access a new vein of customers it could not have before. Jet is known for marketing and selling to the urban millennial, hallmarking them as the essence of the retailer. Walmart can use this acquisition to seek ground in a new demographic of customer.
Bonobos and ModCloth offer the same advancement of customer. Higher end items from both present the chance for Walmart to enter into different customer segments. The $310 million purchase of Bonobos also gives Walmart a unique business model of online and physical retail. Bonobos has been successful in both arenas of retail since its creation in 2007.
In becoming present in physical locations, Amazon continues to target a similar customer with the acquisition of Whole Foods. This functions as a positive aspect as Amazon beefs up its presence to customers already willing to shop from this retailer. However, Amazon may not be tapping into a new arena of customer in the likes that Walmart is attempting to do.
A Mesh of Online and In-Person Shopping
Amazon and Walmart are both striving to become “the everything store,” redefining shopping online and offline. Bezos and McMillon are making changes to erase the distinction between these two modes of retail. Whole Foods’ offers Amazon hundreds of pickup centers in urban areas across the U.S. Customers can shop for food, tech, and other goods and collect these items at a Whole Foods near them.
In response, Walmart is creating new methods of customer shopping. Lore is introducing a new associate delivery program across all Walmart locations. Employees can delivery packages for online shoppers, eliminating the need for customers to leave their homes.
Walmart and Amazon continue to aggressively fight for the position of the world’s top retailer. Both are executing plans to get them further inundated in all modes of retail while also increase their annual revenue. Amazon presents a strong case for coming out on top with its new attempts in creating a physical presence. However, Walmart is the strongest contender. It already has such a massive presence in offline shopping. Moreover, Lore is working quickly to make leaps and bounds in its offline retail, adding new customer segments and items to make it sit confidently in the top retailer position.
We’ll see what happens as these two titans play it out for decades to come!
