Amazon vs. Walmart – Whose side are you on?

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!

 

https://www.recode.net/2017/6/6/15745432/amazon-prime-discount-ebt-cards-government-assistance-lower-income

 

https://www.forbes.com/sites/epson/2017/10/04/5-questions-to-ask-before-you-buy-line-busting-tech/#28773a2d5649

 

https://www.marketplace.org/2017/08/17/business/walmart-amazon-rivalry

11 comments

  1. Nice comparison of Walmart vs. Amazon strategy. I think it is true what you were saying about Amazon trying to appeal to lower income families and individuals. Not only are they discounting prime, but they recently introduced Amazon Cash which allows individuals without bank cards to use Amazon services. I also agree with what you are saying about Amazon trying to take over different industries so that they become a one-stop-shop. We can see them moving towards this goal by their recent acquisitions of Whole Foods, Zappos, and LoveFilm. In regards to Walmart, I also agree that if they are able to utilize their stores properly, this will give them advantage over Amazon because we have learned in class, presentations and blog posts this week that retail is not, in fact, dead.

  2. Excellent post! I feel like this is a topic of conversation that has been brought up in many of my classes. I think you bring up some great points for both sides of the argument. Personally, I have a feeling that Amazon will not make Walmart obsolete, but it will decrease Walmart’s market share and possibly force them to get rid of some store fronts. I think Amazon provides a convenience that Walmart can just not compete with as a store front. This being said I think that Walmart has the greatest chance of survival in comparison to other stores. Like you mentioned in your post, Walmart needs to figure out a strategy in which they can best utilize their store fronts and create an experience that cannot be offered by Amazon.

  3. This seems to be the ultimate battle in retail, I agree that its probably not a zero sum game and both companies will continue existing, but Amazon will probably end up on top. I think this because Amazon has already has established infrastructure for e-commerce and all it has to do is spreading its reach into other industries and markets. Walmart and all other retail companies have to play check-up and be on the defensive to compete with Amazon’s technology and convenience. However, the Walmart speakers at our class last week were confident in their position and strategy of having the people lead the technology, instead of the other way around. It will be interesting to see how it will play out, great post!

  4. I love your analysis of comparing Walmart and Amazon. They are almost trying to do what each other has done in order to balance; i.e. Amazon transitioning to brick and mortar and Walmart integrating to the online platform. You brought up a really interesting point that Walmart targets lower income households promising best value for essential items, making it recession proof. I thought this was a really interesting approach to understanding the business in comparison to Amazon because when you think of Amazon, you think it is almost bulletproof. However, it’s important to take into consideration that Amazon targets the higher end of the income market and if that were to fall apart, would Amazon be able to sustain the products they sell that are not entirely necessary. Great post!

  5. One advantage that Amazon has is not having a brick and mortar store cost. I know they bought Whole Foods but that’s still tiny compared to Walmart. I agree with the other commenters, there is definitely space for both in the retail market. I think Amazon has higher upside because of their digital nature. They offer services and products that Walmart can’t. We’ve all heard the story about Netflix hosting their streaming services in Amazon’s cloud.

  6. These two companies are definitely going to be the major players going forward. If Walmart can get their tech up to pace with Amazon, they will have the advantage because of their brick and mortar locations – two-day shipping doesn’t cut it when you need a present on Christmas Eve or a baking mix at 8:30 at night. After reading today’s articles, I started to wonder if Walmart is developing any tech like the Echo which would allow them to capture more customer data.

  7. I’m really interested to see how Amazon’s efforts to enter the retail space compete with Walmart’s efforts to grow in the e-commerce space. Both require serious infrastructure and cost outlays – so investment in fixed costs will have to be worthwhile. A wrong gamble here could really set a company back, and when they’re competing so closely that would be a serious problem! Amazon has tried so many more new things compared to Walmart – but will Prime Video, Amazon Fresh, or the Whole Foods acquisition be helpful or hurtful? Only time will tell.

  8. This was a great post following up on what we talked about in class last week! I think it’s going to be an interesting few years (or months!!) to watch this race shake out. Retail is absolutely changing, and with Amazon’s growing success, competing is becoming increasingly difficult. Amazon is expanding aggressively into brick and mortar retail, and while Walmart is building out their online presence, I think they need to market it more aggressively to raise awareness. They have free two day shipping without a subscription fee–we should know this!

  9. Nice post! A lot of the points you made echo what I shared in my presentation a few weeks ago — I’m really interested by Amazon expanding to India and Walmart re-envisioning the customer experience. Wamart’s shift to a more people-centric organization and making the buying process more experiential reminds me of @taylorvanhare‘s presentation about Sephora and other players in the beauty industry doing the same. This trend seems to be picking up speed, and leads me to believe that, as you suggest, Amazon and Walmart will be able to co-exist — along with the need to continually evolve.

  10. Love learning about the continuing saga of Amazon. I didn’t know about those Amazon programs to target more low-income individuals and families! It’s so smart to discount prime, and also to allow a monthly payment option. I knew that Walmart had acquired Jet, but how successful have they been at turning this website into a success? I wonder if Walmart is willing to take a decrease in profits (like Amazon does with Prime — especially with the discount) in order to eat up market share? When you think about it, Amazon’s obsession with market share at whatever cost goes against Walmart’s strategy of market domination through strategic management and negotiating good deals with suppliers. Definitely will be interesting to see where this goes…

  11. Great post. I agree on your conclusion that both companies will be able to coexist. I think they are in a different market and have different target customers as you said. It is very different to go to a store or to shop at home. I think Walmart has a bit of an advantage when jet.com’s was acquired. They now have the millennial, tech savvy and heads of households as they go to shop to the store or they shop online with Jet.com or walmart.com (that at the end its all the back office of eCommerce of Jet) The great thing about Amazon is their capacity to grow elsewhere. So conclusion, I think they compete but they have many other businesses that don’t struck with Walmart.

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