Amazon and Walmart are the two biggest retail giants. They are both competing to be the “go to” retail location for all Americans. They both represent opposite sides of the popular debate on where the retail market is going – whether or not brick-and-mortar stores will survive or if they will be completely replaced by online platforms. Both platforms offer an array of products. They offer enough products that all Americans could buy most of their goods there – food, clothing, technology, clean products, toiletries, toys and etc. Amazon is purely an e commerce company, while Walmart has an online platform and it has a lot of large stores around the country. Walmart is working on expanding their online presence to compete with Walmart.
Retail profit margins are not very big. Amazon makes most of its profits from its Amazon Web Services (AWS). Amazon’s target market is high-income-individuals, while Walmart attracts low-income-individuals who go there to buy essential goods. Thus, Walmart is more recession-proof because it attracts a larger number of people and people rely on it to buy essential goods – goods that they need to buy whether or not there is a recession. Amazon is starting to try to compete to get these low-income-individuals to switch over to their company because they have most of the middle/upper-income-individuals using their services. Thus, in order to grow and acquire new customers, they need to target a new market – low-income-individuals/families. Amazon is doing this by offering a 45 percent discount on their prime service for low-income shoppers. They also now offer a monthly payment plan for prime, instead of the one time $99 yearly payment. This is targeted for low-income-individuals who cannot afford to pay a large amount of money at once.
Amazon has been rapidly encroaching on many industries – such as, technology, groceries, media and web services. Amazon is trying to enter a wide variety of industries so that it can take over the respective industry and be a place where people come for all facets of life. Amazon wants to be a one-stop destination for all things a person could possibly need. It will be interesting to see if Amazon will be able to dominate all these different industries or if they are over-asserting themselves. Also, Amazon is looking to expand to a new market – India. If they are able to successfully integrate into the Indian market, this will increase their market by significant proportions. Another interesting point to note about Amazon is that it has an amazing online platform and technology is the future, thus this will be extremely useful for their future success and growth.
Walmart is able to be extremely successful because its target market is low-income-individuals. Most low-income families go to Walmart to get all of their goods – such as, food, clothes, cleaning products, and everything else they need day to day. Thus, Walmart is able to do well in good and bad economic conditions. Walmart is making aggressive moves to compete and come out on top. They spent a couple billion dollars acquiring Jet.com – a discount online retail store that does not have very high profits. Walmart is making these aggressive moves because they know that if they do not make moves to expand and grow in the online-world, they will be completely replaced by Amazon. Also, Walmart is transforming its stores to be more technology savvy. For example, they have acquired new technology that allows customers to check themselves out on their phones. Walmart is well aware of the fact that times are changing and the typical retail experience is going to transform and if they do not adjust their experience, they will fall behind. Lastly, Walmart has an advantage over Amazon in the fact that it already has all of the infrastructure. Walmart has hundreds of stores across the country – they already have all of the stores. It will just be a matter of how they transform these stores in the coming years to align with the changing times.
Personally, I think that both of the companies will be able to coexist, but I think they will not be able to do so in their current state. I think that Walmart will remain a place where a lot of low-income people come to get necessary goods, but I think that they will have to scale back on some of the products that they offer and instead focus on food and other daily goods – almost similar to a convenient store, but on a larger scale. Lastly, I think Amazon will continue to have extreme success and it will continue to take up more market share of a variety of different industries. I think Amazon will have to expand into different countries and continue to try to target the low-income market through various promotions in order to grow and get a larger proportion of the market.
It will be exciting to see where these two companies go in the future and if they are able to coexist or if one is going to prevail over the other!