Walmart and Amazon are competing in nearly every facet of their businesses. I’ve written about some areas recently including their approaches to innovation and the evolving role of the merchant within their organizations. Another area that’s a heavy focus for both organizations? The race to the top for their physical and digital presences.
This race started with Walmart WMT -0.07% acquiring Jet.com in August 2016. This was Walmart’s direct hit against Amazon’s web presence and an apparent signal that the company was ready to compete.
It didn’t take long, though, for Amazon to strike back with an acquisition of Whole Foods in June 2017. As I previously wrote, the goal of that acquisition was for Amazon to gain more of the rich data behind the Whole Foods customer and to garner all of the private label brands that the grocer had accumulated.
Since last summer, the organization has been looking at ways to leverage that acquisition with services like Amazon Lockers and Amazon Go to bolster its physical presence.
Much like with ecommerce, convenience is key for shoppers in the physical world. A main priority for Amazon is to shorten the time it takes for a consumer to complete a shopping trip. Amazon Go Is all about creating a frictionless shopping experience. It opened to the public in January 2018 and promised no cashiers or checkout lines and a streamlined shopping experience. This can be extremely beneficial given that in the past year, 86 percent of U.S. consumers said they left a store due to long lines, resulting in a purchase at a different retailer or no purchase at all according to 451 Research.
Additionally, Amazon Lockers are popping up in all Whole Foods locations. While they offer a convenient way for shoppers to pick-up and return items from Amazon.comAMZN +0.63%, they also increase the likelihood that someone will purchase something in-store while visiting the Locker.
All of this is happening while Amazon continues to bolster its online presence and offerings on its platform. More retailers than ever are selling through the channel, enabling Amazon to see into trends and pricing data and thus make more informed decisions on its own private label brands. More on that in my next article.
Walmart on the other hand already has a huge physical network with more than 5,000 stores. The company continues to improve its in-store experience, through technology like its “Store Assistant” app. Walmart is also testing new layout concepts and drawing people in with entirely revamped private label apparel brands.
The retailer is making great strides on the ecommerce side as well. Walmart recently released a new streamlined version of its website and mobile app, changing the look and feel while making it easier than ever for consumers to find the deals they know and love from the brand.
Also on the new website, you’ll find an increased focus on high-end fashion through its partnership with Lord & Taylor. Both companies expect to see a boost in sales for different reasons. Walmart can now expand beyond everyday-low-priced fashion and attract a higher-end customer. Lord & Taylor has expanded their online presence and customer base without incurring a lot of cost.
While all of those are great, I think Walmart’s best strategy to pull shoppers from Amazon.com is through its free two-day shipping offering. While Amazon offers this to individuals who have a Prime membership, which recently had an 18% uptick in cost, Walmart offers this to all shoppers with no fee. They just have to spend $35 in the transaction.
It’s really been interesting to watch these two close the gap, and I think it will only continue to heat up. Both will experience major pains as they continue to move into uncharted territory.
I do think that Amazon has gotten so big that they have started to underestimate other retailers, Walmart included. While anyone who has claimed this success certainly deserves the accolades, a massive ego provides an opportunity for a competitor. Seattle and Silicon Valley seem to have no shortage of ego whether supported by results or not.
The battle continues.