A while back we did an article where we laid out the results of our research on the e-commerce strategies on both Walmart and Amazon. The goal, of course, was to conclude whether Walmart or Amazon had a dominant strategy. Now it is time to update our findings on this Walmart vs Amazon e-commerce competition.
Beat Amazon? All of a sudden, everyone has gotten serious about this E-commerce competition. Why? It’s all about the current trends and the vast future potential.
Walmart is doing all it can to catch up with Amazon online. But lots of obstacles exist.
Customer set differences
Walmart demographics, a quarter of whom reportedly do not use debit or credit cards or even have a bank account, represent a big difference with their key e-commerce competitor.
While we have not found any statistics on Amazon customer set, we speculate a much larger representation of higher end incomes among their shoppers.
The big advantage to Amazon we believe, both in consumer disposable income, but also in the ability to operate and shop online. And take advantage of frequent new technology features.
Existing strategies
Walmart has an enormous and growing network of brick and mortar outlets — 4,000 in the U.S. and counting. More internationally. With those stores goes an equally enormous product offering. A blessing but an equal curse.
They are a long ways from being able to put all the products online where they can be easily found.
At some stage, these stores and product line may be an advantage for Walmart. But those are technology constrained goals that are, for now, out of reach.
And that is not even considering how Walmart might solve its internal competition problems. Can you imagine the Wal-Mart cash cow making compromises regarding revenue and profit to help their e-commerce business? Not us.
Related value: Remarkable Growth Lessons Every Business Needs
Both Amazon and Walmart have massive product offerings. This isn’t a new problem for either of them, but as the race to fulfill orders guarantees quicker turnaround times and more convenience after placing the order.
Walmart must control everything it can before the order is placed to ensure it’s placed on them.
In this case, that means making sure customers can find what they’re looking for, quickly and easily. Or, in the case that customers don’t know exactly what that is, helping them figure it out with a fairly high degree of accuracy.
What exactly would that take? A lot. But Walmart’s two most crucial priorities will be helping online customers navigate its extensive product list easily and quickly and streamlining online and offline operations to create an overall turnkey experience.
“Prime could be the VIP pass to the Internet,” AllSaints global digital chief Rich Ascott told Re/code’s, Jason Del Rey. Amazon reportedly refers to its initiative to partner with more retailers as “Prime Pass” internally.
The idea of Prime Pass is that it could give subscribers free, fast shipping from other websites too. Here’s how it works:
In-store pickup is supposed to make shopping easier, by allowing customers to skip lines and get their items right away without having to pay higher rates for shipping.
But here is an interesting test. In a story from Business Insider, a reporter recently tried Wal-Mart’s in-store pickup and was shocked by how inconvenient it was. Here is a case in point:
I was in the market for a Fitbit, so I compared prices online and found the lowest price atWalmart.com.
At $78.52, the Walmart.com price was $1 lower than Amazon’s and more than $20 lower than Best Buys.
So I decided to go with Wal-Mart.
I wanted the Fitbit that same day, but I was afraid that the price would be higher in the stores. (I was right — when I went to pick up my purchase, I walked by the electronics department and saw that it was listed for $99).
The Fitbit Flex was listed as $78.52 on Walmart.com and $99 on the store shelf. So I made the purchase on Wal-Mart.com last Thursday and selected the option for in-store pickup.
Wal-Mart sent me an order confirmation immediately that said I would receive another email when my Fitbit was ready for pickup.
I expected it to be ready within minutes. How long could it take for someone to pull the item from shelves?
But more than three hours passed before I got the email saying my order was ready. It was close to 9 p.m. at that point, so I decided to wait until the following day to pick it up.
When I arrived at Wal-Mart on Friday, I was expecting to pick up the Fitbit at the front of the store and be on my way home within minutes.
Instead, I was directed to a department labeled Walmart.com that was located all the way in the back of the store. (This isn’t unusual — according to Wal-Mart’s website, the Walmart.com pickup areas are typically located towards the back of stores).
This surprised me. I thought the purpose of the in-store pickup option was convenience.
As I walked through the store, I passed the electronics department and spotted the Fitbit. I decided last minute that I wanted a blue Fitbit instead of the black one I picked out online, so I grabbed the gadget from the shelf and continued walking toward the Walmart.com department, hoping for an easy exchange.
Once there, I stood in line for about 15 minutes. There was only one associate at the register, and a customer ahead of me had a problem with his order.
When it was finally my turn, I pulled up the confirmation email on my phone and displayed a barcode for the associate to scan.
She told me the scanner didn’t work, so I read the 13-digit confirmation code aloud to her.
Once she found my order, I asked her if I could exchange it with the Fitbit I pulled from the shelf. It was the same exact product, just in a different color.
She said that the store inventory and Walmart.com inventory are separate, so I would have to get refunded for my online purchase and then go to the front of the store to buy the Fitbit I grabbed from the shelf.
“They are the same product,” I said. “Why can’t I just go home with the one from the shelf?”
She advised me to talk to customer service.
In retrospect, I should have paid the extra $1 to purchase the Fitbit at Amazon and waited an extra day to get it delivered for free to my doorstep.
An amazing story and example of the many kinks in the Walmart system, eh?
The Jet acquisition
Jet is a new online retail site that had hopes to take on Amazon by targeting price-conscious shoppers. Now after its acquisition by Walmart, the new beast has even more brazen.
Users of Amazon and customers of Costco and Sam’s Club are no strangers to club based retailers… the question is, however, are these same customers ready to introduce another merchant to their go-to list of places to shop?
With the Jet.com/ Walmart joining the ranks as the newest club based retailer, consumers will naturally need to decide if it’s right for them. First, however, they need to understand just exactly what Jet.com is andwhether or not it makes sense for them to become part of their “club.”
With a company seemingly designed to challenge Amazon head-on while also offering customers savings they have never experienced before, how can a company like Jet.com expect to survive? According to their website, Jet.com’s ultimate goal is to make their profit from customer membership fees.
We don’t profit from the products we sell—just on membership fees.
So we’re always on your side. Every time we can get costs down, we pass the savings back to you,” Jet.com’s website states as part of their membership benefits.
“[Amazon is] in an environment where retailers are catching up,” according to Forrester analyst Sucharita Mulpuru. She pointed to the fact that, in the most recent quarter, Wal-Mart’s online sales grew at a faster pace than Amazon’s, which “means that they’ve been picking up [market] share.”
One possible reason for Amazon’s slower sales growth is that it’s starting to lose its price advantage relative to competitors. A recent study by pricing firm 360pi and Wells Fargo compared 100 items at Amazon to nine traditional retailers, including Wal-Mart and Target.
Although Amazon is still widely the price leader, Wal-Mart and Target had lower prices in the clothing and shoes, electronics, housewares and health and beauty categories.
At Wal-Mart, for example, prices have gone from an average 1 percent lower than Amazon’s to 10 percent lower in the most recent quarter. Macy’s prices were only 1 percent higher than Amazon’s in apparel and shoes, compared with 17 percent a year ago.
Walmart vs Amazon supply chain.
Walmart vs Amazon E-commerce competition … new Walmart discounts
Walmart is rolling out a new discount for online shoppers that will be challenging for Amazon to beat.
Starting April 19, 2017, the retailer will offer a discount to customers who ship purchases to one of Walmart’s more than 4,700 US stores instead of to a home or elsewhere.
Here’s how it works: While checking out online for purchase — for example, a $1,698 Vizio flat-screen TV — shoppers will be given the option to ship the item to a store or have it sent elsewhere.
If the shopper chooses to ship the TV to a store, Walmart will knock $50 off the purchase price. If the customer chooses to ship it to their home, the price will stay the same and Walmart will deliver it for free in two days or less.
Discounts will vary for every product. Bigger items will have steeper discounts because they cost more to ship.
The offer will be hard for Amazon, Walmart’s biggest rival, to match, because Amazon doesn’t have any physical stores.
Walmart will offer the deal, which the company is calling a “pickup discount,” on 10,000 items starting next week. By June, more than 1 million items will have the discount.
Here are some other examples of discounts that will be offered:
$2.55 off a Lego toy that originally was $23.99.
$7.40 off a Britax infant car seat that originally was $148.05.
$4.46 off a Coleman cooler that originally was $111.49.
But there’s a catch: Discounts will be applied only to items that aren’t already available in stores.
Lore said the program wouldn’t require any additional investment from Walmart.
Walmart has been ramping up its e-commerce operations since its $3 billion purchase last year of Jet.com, which was founded by Lore.
The idea for the “pickup discount” was inspired by Jet, which is known for its so-called smart-cart options that allow shoppers to save money if they bundle purchases into larger packages or give up services like free returns.
e-service quality
“Increased e-service quality is associated with increased customer satisfaction, which then leads to higher repurchase intentions,” said Vikas Mittal, the J. Hugh Liedtke Professor of Marketing at the Jones School.
“In other words, increasing e-service quality enhances customer satisfaction and the likelihood of customer repurchase. If Amazon and Wal-Mart want to keep their customers coming back, they must focus on increasing satisfaction via e-service quality.”
Rice U research sheds light on Amazon versus Wal-Mart competition Winning is a matter of superior e-service quality, experts say
E-service quality is the “extent to which a website facilitates efficient and effective shopping, purchasing and delivery,” according to one of the authors.
E-service quality is “the beginning of the end of the transaction, including information search, website navigation, order, customer-service interactions, delivery, and satisfaction with the ordered product,” the study said.
Mobile space
In the mobile space, the country’s biggest retailer is the underdog and Amazon is sitting pretty, at least for now. According to ComScore, Amazon’s family of sites is the top retail destination among smartphone users by a wide margin, drawing nearly 50 million visitors in July.
Wal-Mart trailed behind Amazon, as well as Apple and eBay, with just over 16 million visitors.
With one big win in its pocket, Walmart has set out to redesign its online experience with a mobile-first mantra.
“The new layout includes bigger buttons and swipe functions, designed for easy mobile browsing, and a bigger search box with new search filters,” CNET notes.
Beyond designing for a multitude of screens, the new Walmart.com
“now tailors itself much more to our individual customers, personalizing much more of the content than ever before based on many aspects of a customer’s history with us,” Ben Galbraith, VP of Global Products and E-Commerce, wrote in a blog post.
Thanks to smartphone payments apps we have our requisite coupons and loyalty points always at the ready. We can also now instantly send (digital) cash to another person’s mobile device, bypassing all manner of legal and non-legal intermediaries.
Retail — the entire shopping, buying, paying, servicing, researching, promoting ecosystem — is being de-constructed by smartphones, social media, location data and the cloud, with power flowing outward to every potential buyer.
Amazon has existed in the e-commerce technology world since their inception. They think like a technology company and agile innovators. They are not afraid to try new things, and they can get things done quickly, thanks to the culture their CEO Bezos has instilled.
They are miles ahead of the competition in thinking and acting like a business innovator.
Technology lead
Amazon has a massive product offering and has a big lead in the race to fulfill orders guarantees quicker turnaround times and more convenience after placing the order.
More on competition: Can the Jet Strategy Win the Battle with Amazon
Jet’s technology must make sure customers can find what they’re looking for, quickly and easily. That is not an easy task with all those affiliates.
Or, in the case that customers don’t know exactly what that is, helping them figure it out with a fairly high degree of accuracy.
The bottom line
At the end of the day, the new Walmart’s rise to online dominance just revolves around turning an otherwise complicated shopping experience into one that feels quaint and easy.
It can accomplish this by setting up a strong behind-the-scenes infrastructure that puts the customer experience at the forefront.
And isn’t that what their new strategy is all about—giving the customer what they want where and when they want it?
Fortunately, it is much easier said than done. But they are making growing in-roads.
Need some help in finding ways togrow your customers? Such as creative ideas to help the differentiation with potential customers? Or perhaps finding ways to work with other businesses?
Call today for aFREEconsultation or aFREEquote. Learn about some options to scope your job.
Call Mike at 607-725-8240.
All you get is what you bring to the fight. And that fight gets better every day you learn and apply new ideas.
When things are not what you want them to be, what’s most important is your next step. Call today.
Test. Learn. Improve. Repeat.
Are you devoting enough energy continually improving your business learning?
Mike Schoultz is the founder of Digital Spark Marketing, a digital marketing and customer service agency. With 40 years of business experience, he blogs on topics that relate to improving the performance of your business. Find them on G+, Twitter, and LinkedIn.
Digital Spark Marketing will stretch your thinking and your ability to adapt to change. We also provide some fun and inspiration along the way. Call us for a free quote today. You will be amazed at how reasonable we will be.
More reading on business growth from Digital Spark Marketing’s Library:
7 Surprising Things to Know About the Zillow Business Model
10 Lessons for Successful Entrepreneurs You Need to Know
Mike Schoultz is a digital marketing and customer service expert. With 48 years of business experience, he consults on and writes about topics to help improve the performance of small business. Find him on G+, Facebook, Twitter, Digital Spark Marketing, and LinkedIn.
Beat Amazon? All of a sudden, Walmart has gotten serious about this ecommerce competition. Why? It’s all about the future and the current trends. And the Walmart e-commerce strategy.
According to Nielsen, ecommerce will gain more ground than any other segment of the retail industry by 2017, with a compound annual growth rate of 11% each year. Supercenters come in second, with their growth rate projected at only about half that of web shopping. When you consider sales for consumer packaged goods online — food, groceries, everyday items — are more like high double digits, almost 20%, you can see Walmart’s concern.
Both chains dominate their areas of expertise. Once just a bookseller, Amazon is now the biggest online store in the world with $61 billion in 2012 revenue. Walmart is the world’s largest retailer of any kind with $469 billion 2012 revenues (estimated $7-8 coming from E-commerce in 2012).
Related post: Secrets to the Remarkable Innovative Lady Gaga Brand
Walmart is doing all it can to catch up with Amazon online. But lots of obstacles exist.
Here is a short video that will refresh a brand for you:
We don’t think Walmart can catch Amazon for these 6 reasons:
Amazon’s singular focus
Amazon is an e-commerce company in everything they do. They have developed all their expertise in full support of e-commerce. In fact they now do e-commerce for many other businesses. They are not hamstrung by an enormous brick and mortar business like Walmart.
No internal competition like what Walmart faces day-in day-out. Walmart doesn’t discuss this subject and probably would deny it exists. But it does. No question there. And it yields a gigantic silent advantage for Amazon.
Walmart E-commerce logistics
Logistics is what made Walmart great. But delivery is a different matter. Walmart is dabbling in same-day delivery and even going a step further than Amazon by using stores as fulfillment centers and if expanded, could turn 4,000 stores into bases for same day delivery.
Two-thirds of the U.S. population lives within 5 miles of a Walmart, and trucks crisscrossing the country arrive daily to replenish the stores, which can greatly reduce shipping costs. However, the process comes with serious limitations, particularly since it diverts workers’ attention away from ensuring stores are clean and properly stocked. But it is still a possible big advantage to Walmart if they could think like one business instead of two.
They are also attempting to crowdsource package drop-off among customers.
But Amazon has non-perishable products like diapers that its infrastructure allows shoppers to set up regularly scheduled deliveries, a service popular on Diapers.com. A fantastic feature.
And Amazon is already a step ahead with its Amazon Fresh same-day delivery, currently available in the Seattle area but soon headed for California. Amazon is building out this infrastructure for perishables. Groceries will be the battleground very soon coming to the forefront. This will further eat into solid Walmart business.
Related material: Here’s How to Make Your Brand Awesome
But what is Walmart doing? They are creating a vast new logistics system that includes building new warehouses for Web orders. Hedging their bets so to speak. More illustration of the internal competition in our mind.
As Walmart’s online orders have grown, it has turned to makeshift spaces carved out of store-serving distribution centers and third-party warehouse operators to help handle the load. The extra layer added to its costs. Walmart’s online shipping can cost $5 to $7 per parcel, while Amazon averages $3 to $4 per parcel, analysts say—a big difference considering some of Walmart’s popular purchases are low-cost items like $10 packs of underwear.
Walmart e-commerce strategy … agile innovation
Amazon has existed in the ecommerce technology world since their inception. They think like a technology company and agile innovators. They are not afraid to try new things and they can get things done quickly, thanks to the culture their CEO Bezos has instilled.
The big box behemoth may not be a start-up, but it does try to think like one with its Walmart Labs division. Those groups is developing Pangaea, a global technology platform with scan and go apps that let shoppers buy in store via a smartphone, and online operations in growing markets outside the U.S. such as Brazil and China. They’re doing more new things, but they are slowed down by their legacy business and its mindset.
They are as trying out lockers, one of Amazon’s hallmarks, allowing shoppers to order items online and pick them up in stores — crucial for the Walmart demographic, a quarter of whom reportedly do not use debit or credit cards or even have a bank account. But why would an on-line shopper want to deal with the congestion of a visit to a Walmart mega store? Not us.
Walmart ecommerce strategy customer set differences
Walmart demographics, a quarter of whom reportedly do not use debit or credit cards or even have a bank account, represent a big difference with their key e-commerce competitor.
While we have not found any statistics on Amazon customer set, we speculate a much larger representation of higher end incomes among their shoppers. Big advantage to Amazon we believe, both in consumer disposable income, but also in ability to operate and shop on-line. And take advantage of frequent new technology features.
Existing in-store strategies
Walmart has an enormous and growing network of brick and mortar outlets — 4,000 in the U.S. and counting. More internationally. With those stores goes an equally enormous product offering. A blessing but an equal curse. They are a long ways on being able to put all the products on-line where they can be easily found.
At some stage these stores and product line may be an advantage for Walmart. But those are technology constrained goals that are, for now, out of reach. And that is not even considering how Walmart might solve its internal competition problems. Can you imagine the Wal-Mart cash cow making compromises in terms of revenue and profit to help their e-commerce business? Not us.
Walmart e-commerce strategy … e-commerce technology lead
Like Amazon, Walmart has a massive product offering. This isn’t a new problem for either of them, but as the race to fulfill orders guarantees quicker turnaround times and more convenience after placing the order, Walmart must control everything it can before the order is placed to ensure it’s actually placed through them.
In this case, that means making sure customers can find what they’re looking for, quickly and easily. Or, in the case that customers don’t know exactly what that is, helping them figure it out with a fairly high degree of accuracy.
Walmart must transform itself into an invisible personal shopper to help customers navigate its vast inventory.
What exactly would that take? A lot. But Walmart’s two most crucial priorities will be helping online customers navigate its extensive product list easily and quickly, and streamlining online and offline operations to create a turnkey overall experience.
To act as an invisible personal shopper, Walmart must master what they do with this powerful combination of content and data—and when they do it. The goal is to use it in real-time, as customers are browsing their online store.
Walmart is trying to improve links between its store inventory, website, and mobile phone apps so that more customers can order online and pick up their purchases at stores, which half of Web customers do already.
Walmart is trying Web-based shopping tactics, like its Pay With Cash program for Walmart customers who don’t have credit cards. The new program allows them to reserve products online and pay cash at their nearest store.
Key takeaways
At the end of the day, Walmart’s rise to online dominance really just revolves around turning an otherwise complicated shopping experience into one that feels quaint and easy. It can accomplish this by setting up a strong behind-the-scenes infrastructure that puts the customer experience at the forefront.
And isn’t that what their new strategy is all about—giving the customer what they want where and when they want it?
Unfortunately, it is much easier said than done.
Need some help in capturing more customers from your branding design strategies? Such as creative branding ideas to help the differentiation with potential customers?
Call today for a FREE consultation or a FREE quote. Learn about some options to scope your job.
Call Mike at 607-725-8240.
All you get is what you bring to the fight. And that fight gets better every day you learn and apply new ideas.
When things are not what you want them to be, what’s most important is your next step. Call today.
Test. Learn. Improve. Repeat.
Are you devoting enough energy to improving your continuous learning for yourself and your team?
Do you have a lesson about making your brand marketing better you can share with this community? Have any questions or comments to add in the section below?
Digital Spark Marketing will stretch your thinking and your ability to adapt to change. We also provide some fun and inspiration along the way. Call us for a free quote today. You will be amazed how reasonable we will be.
More reading on brands and branding from Digital Spark Marketing’s Library:
Mike Schoultz is a digital marketing and customer service expert. With 48 years of business experience, he consults on and writes about topics to help improve the performance of small business. Find him on G+, Facebook, Twitter, Digital Spark Marketing, and LinkedIn.
