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Walmart vs Amazon

The battle of retail is always led by the biggest: Amazon and Walmart

 

Every other Wednesday, h/commerce provides in-depth analysis of the most impactful trends reshaping retail.

Amazon and Walmart have come first and second on the podium in the global retail sector. It is never clear who beats who, but one thing is sure: there is no one on top of them.  

Walmart and Amazon’s stories are, at the very least, interesting: two big retailers with different initial strategies which are now being crossed because both are incorporating each other’s know-how into their own actions. If we go through the history of each of the companies, we can clearly see that Amazon and Walmart were born in different areas.

A never-ending competition

 

Amazon is the most competitive online marketplace of all time  

First, concerning Amazon, we observe all Amazon’s and its merchants’ products are sold directly, through its online marketplace. Bezos established a determinate path in 1994, which Amazon has thoroughly followed: A journey led by continuous innovation. 

If we had to highlight the most relevant competitive advantage of Amazon, we probably would refer to the strong value proposition the company offers, the wide range of products, goods and now entertainment the customer can access with ultra-convenient shopping experience and low prices. Among the broad variety of products and services Amazon offers, we can find everything from one of the biggest film production companies of all time like Metro Goldwyn Mayer, to a pharmacy product.

Amazon has targeted more than 50.000 different customers profiles that are distributed among the platforms offered by the company. To get these customers loyal to its services, Amazon has created a subscription-based model through Amazon Prime.

Even if the marketplace was already one of the strongest retailers of the market, after taking a long look at its most direct competitor, it has concluded that diversifying could help the company grow even more, even faster, and that it could start a new competition against Walmart. An offline competition. In an age where digitization is the name of the game, the most powerful online retailer of all time is starting to set up physical shops. The company has established stores like Amazon Fresh or Amazon Go that are supermarkets focused on healthy food offers and checkout-free shopping.

Social Commerce

Source: Similar Web

Walmart a strong brick&mortar available everywhere in the United States

Moving on to Walmart, we identify that the core of the company is the traditional retail business model. Walmart has always adopted -like Amazon regarding this aspect- a low-cost leadership strategy. Although the giant has been working through physical stores since its beginning, recently it has significantly increased its focus on structuring online sales without letting aside its already well-established brick and mortar stores and excellent supply chain and logistics.  

Nowadays having only physical stores means to play at a disadvantage compared to those who have stepped straight into ecommerce. Walmart’s most recent and important strategy is based firstly on moving into the online market, and secondly, on setting its online prices similarly. Another Walmart’s highlight is that it has acquired its eCommerce platform Jet.com in 2016 for $3.3 billion, which boosted its competitive advantage in the eCommerce space. 

Difference in numbers

If we take a look at the digital growth of both competitors, it is obvious to point out that in terms of digital growth, Amazon is significantly outperforming Walmart, which is making giant strides but has not yet reached the digital retail titan performance. Amazon generated from January 2021 to June 2021 59.9% of its desktop traffic through direct channels whereas Walmart has generated 46.8%. Amazon also generates more traffic than Walmart through its marketplace. Amazon controls 38% of the United States ecommerce retail market, versus Walmart’s 8% control. 

 

If we move to the offline world, we observe that Walmart has 5,353 US stores while Amazon has 589 US stores back in 2020. On the other hand, Amazon has 95 million monthly website visitors while Walmart has 100 million monthly website visitors. 

Source: Company reports & Statista


Why is it interesting?

 
Amazon and Walmart clearly inspire each other, and that is mainly the basis of their rivalry; that each adopts the other’s successful actions. Walmart has exponentially increased its presence in the technology area and Amazon has joined forces to target offline commerce. 

The reason they are transforming themselves could be explained by the fact that there is a standardization of the offer: there is a wide and continuous competition that copes all the segments of the market, both online and offline, so if a retailer does not increase its presence in every arm of the products and services sector, it will lose a fringe in the market.  

Nowadays, to succeed, being competitive in a market that is close to saturation is vital to maintain leadership. Both retailers must consider before establishing their strategies all the distribution and delivery possibilities available in the sector, all the ways to reach the consumer in a non-intrusive way, the new needs of consumers in terms of sustainability, their desire for instantaneity and their massive use of technology in terms of purchasing. 

As Amazon and Walmart begin to offer many of the same products to smaller retailers, smaller sellers are finding increasingly difficult to offer their items for sale; their products are not routinely sold at competitive prices due to the larger market players presence. Even though sellers have the desire to imitate these two big actors, Walmart and Amazon make it hard for them to widely grow in a market that is that occupied and that already has almost every offer covered.

 

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