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Wal-Mart, Amazon Battle For Online Retail's Future
Hugh Pickens writes "The NY Times reports that Amazon and Wal-Mart are waging a price war for the future of online retailing that is spreading through product areas like books, movies, toys, and electronics. The tussle began last month over which company had the lowest prices on the most anticipated new books and DVDs this fall, but has now spread to select video game consoles, mobile phones, even to the humble Easy-Bake Oven. 'It's not about the prices of books and movies anymore. There is a bigger battle being fought,' said Fiona Dias, executive vice president at GSI Commerce, which manages the Web sites of large retailers. 'The price-sniping by Wal-Mart is part of a greater strategic plan. They are just not going to cede their business to Amazon.' Wal-Mart, with $405 billion in sales last year, dominates by offering affordable prices to Middle America in its 4,000 stores, while Amazon, with $20 billion in sales, caters mostly to affluent urbanites who would rather not push around a cart. But Amazon is expanding its slice of the retail pie at an alarming rate — its sales shot up 28 percent in the third quarter of this year; and sales in Amazon's electronics and general merchandise business are up 44 percent. 'We have to put our foot down and refuse to let them grow more powerful,' says Dias. 'I applaud Wal-Mart. It's about time multichannel retailers stood up and refused to let their business go away.'"
Amazon has one distinct advantage: I will never buy anything from Walmart. That doesn't necessarily mean I will buy it from them instead, but at least I'm more likely to.
Wal-Mart ... dominates by offering affordable prices to Middle America... while Amazon ... caters mostly to affluent urbanites
Because we all know how there are no Wal-Marts along the East or West Coasts, and those backward "middle Americans" don't have the Internet.
For now, until one of them cedes, or make a competitive deal, even those of us who avoid Wally World like the plague. Then we all lose, but for now I'm at least entertained seeing Walmart with an adversary.
Absolute power corrupts absolutely. indymedia
Fast shipping. Great customer service. Better prices. And most importantly there are better/quality reviews on Amazon. Sorry Walmart... and btw even locally I would go to Target instead of Walmart.
Q: I am short, useless and provide no value. What am I? A: a sig
What? Walmart: $14.49 Amazon: $14.50
The cited prices applied at the book's release. They've gone up in the intervening month.
Benford's Corollary to Clarke's Law: "Any technology distinguishable from magic is insufficiently advanced."
Remember all those quirky startups? That was a dead end. The new economy is 3 or 4 giant retailers selling everything.
Huzzah!
In Capitalist America, bank robs you!
At TFA points out, Amazon serves more affluent urban populations that prefer to make their purchases online and thus avoid unnecessary trips to pick up items which can just as well be delivered. Not to mention the fact that many of these wealthier urban dwellers live in higher tax states and in higher cost cities where using Amazon doesn't add sales tax (New York being an notable exception) and the nearest WalMart might be a bit of a drive (assuming that they even own a private vehicle). Amazon also has a sophisticated website and online order fulfillment system, including a strong franchise in intelligent and automated recommendations, which they have built up over many years of successful business and feedback; WalMart is definitely playing catchup here. On the other hand, WalMart practically wrote the book on retail supply chain management (the TFA points out that Amazon has poached talent from WalMart in the past to improve their own supply chain logistics) and has detailed regional knowledge of consumer trends and which items maximize profits and at what prices. Amazon has their affiliate program, but these affiliates are often unable to match the prices offered by WalMart when Amazon itself doesn't stock the items in question. IMHO, in the long run, both companies will continue to be successful and while there will be battles over turf (DVDs, Books, Electronics, etc) there are sufficient differences in consumer preferences to accommodate both business models going forward.
No matter who wins, the money still goes to China.
And you can buy stuff on it? brb while I google that.
Does having a witty signature really indicate normality?
let alone laws governing what can and cannot be shipped to where it is pretty easy to understand that one of the biggest hurdles of establishing a new business is government.
I code for distribution systems myself and the complexity of where items can go, the taxes on each per locale, and even how they must be transported, are mind boggling. Too many times competition includes fighting local governments who seem to find ways to create fines based on that day's interpretation of a law
* Winners compare their achievements to their goals, losers compare theirs to that of others.
Yes! Down with the Amazon monopoly! Give the underdog with twenty times the annual sales a chance! Preserve competition!
It would eliminate some of the price advantage, but certainly not the logistics advantage. I still shop at Newegg, despite the fact that I pay sales-tax, vs say other vendors like Provantage. Why? because newegg can get it here in ~2 days, while other places like Provantage or GearXS will take a week.
Prices have since changed, so the prices you've found don't reflect historical pricing. As for the "Black Friday feeding frenzy" vs. price wars... those aren't mutually exclusive. Periods of high sales volume are when it's most important to be able to adjust prices relevant to competition -- especially if engaged in a price war to capture volume.
Hah. How many Walmarts are there in NJ, the nation's most densely populated state? Lots. How about the San Francisco Bay area, as another poster pointed out?
At any rate, it is competition. What cracks me up is that someone siding with Walmart is claiming that Amazon is trying to drive B&M shops out of existence, and Walmart must defend B&M retail outlets against the predations of Amazon. Seems to me that Amazon is playing the same game Walmart played that drove all the traditional retailers out of business... giving customers lower prices due to reduced overhead.
"Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
Your company's name will be tarnished, and you will get the blame, not Wal-Mart.
I'd say the blame belongs where the customer places it. Brand recognition and loyalty goes both ways, and if a company is going to slap a strong name on a piece of garbage just to get on a Walmart shelf then they deserve the erosion.
More Twoson than Cupertino
And they are now trialling $6.99 same day shipping in select cities, order before 11am and have it by the end of the day.
And it creates massive piles in landfills and burns our limited fuels in production and transport. No thanks.