Walmart Plays Catch-Up With Amazon

HughPickens.com writes: According to James B. Stewart in the NY Times, for the past 16 years Walmart has often acted as though it hoped Amazon would just go away. When Walmart announced last week that it was significantly increasing its investment in e-commerce, it tacitly acknowledged that it had fallen far behind Amazon in the race for online customers. Now, the magnitude of the task it faces has grown exponentially as e-commerce growth continues to surge globally. "Walmart.com has been severely mismanaged," says Burt P. Flickinger III. "Walmart would go a few years and invest strategically and significantly in e-commerce, then other years it wouldn't.Meanwhile, Amazon is making moves in e-commerce that's put Walmart so far behind that it might not be able to catch up for 10 more years, if ever."

In 1999, Amazon was a fledgling company with annual revenue of $1.6 billion; Walmart's was about $138 billion. By last year, Amazon's revenue was about 54 times what it was in 1999, nearly $89 billion, almost all of it from online sales. Walmart's was about three times what it was 15 years before, almost $486 billion, and only a small fraction of that — 2.5 percent, or $12.2 billion — came from Walmart.com. Walmart's superefficient distribution system — a function of its enormous volume and geographic reach — was long the secret to Walmart's immense profitability. Ravi Jariwala, a Walmart spokesman, says that Walmart is building vast new fulfillment centers and is rapidly enhancing its delivery capabilities to take advantage of its extensive store network to provide convenient in-store pickup and adds that 70 percent of the American population lives within five miles of a Walmart store. "This is where e-commerce is headed," says Jariwala, which is to a hybrid online/in-store model. "Customers want the accessibility and immediacy of a physical store," along with the benefits of online shopping.

Comments

brick and mortar is an assett

[SethJohnson]

As the summary suggests, Walmart does have an advantage in its distribution network and storefront locations. At a greatly-reduced cost, Walmart could very quickly compete with Amazon for Same-Day delivery service if that proves to be lucrative.

Additionally, in the not-so-distant future, when autonomous vehicles become the norm, consumers could order online and send their own car to the Walmart distribution center to be loaded up with the groceries, etc. to reduce the cost of deliver.

Re:Walmart's website just gets people pissed off

[ezelkow1]

Not only that but usually you could select same day pick up at the store your in, wait around until you got the 'ready' email, walk to the back of the store and pick up the one you were looking at.

I did this for a carpet cleaner walmart had, 100$ less online, but they refused to sell it to me at their online price. I had to order it from my phone, select the store I was at, then wander around for 45min until I got the 'order ready' email, then walk to the back of the store and pick up the same unit I had just been looking at.

Ill never understand why B&M stores always treat their online segment as a whole other business rather than integrate properly

Re:Great 5 stars!

[spire3661]

I have been paying sales tax on Amazon for years and years. Further it wasnt Amazon dodging taxes our lawmakers SPECIFICALLY exempted internet commerce so that it could grow.

Re:Great 5 stars!

[unencode200x]

One things that is interesting is that the buying and marketplaces are different between Amazon and Walmart. Just about anyone can sell on Amazon. Prime sellers obviously have some more hoops to jump through. Walmart has to have their buyers pick products, negotiate prices hard, etc. They have more work to do (I think) to sell you something. That has made some sellers move their products to Amazon. The other thing is that sellers don't have to run a whole eCommerce site anymore. Amazon makes it super easy to sell and for buyers to buy.

Anecdotally, I have a family of six. We have a "Super" Walmart which is the only major store in my town of 6,000 people the surrounding towns. They have groceries, the normal stuff they carry, an auto repair shop, a doctor, optometrist, two fast food places, and some other things and are open 24/7. We used to shop there all the time. If I wanted to go to Target or Best Buy or whatever I'd have to drive about 20 to 30 minutes or do it during my lunch hour (which is super inconvenient).

Now we shop almost exclusively at Amazon and we buy our groceries from Peapod. Selection and convenience are the biggest thing for me. I've moved to 90 percent or more of my purchases to Amazon (we have a family of six). Walmart either doesn't have what I need (they tend to carry lower end things here anyway) or I just don't feel like going there. Waiting two days for Amazon is fine.

BTW, Peapod is freaking awesome too because everything is just there. It saves your last order and you can just reorder, adjust quantifies or whatever, it's usually about the same price as Walmart's grocery store. Produce is great and they even deliver those 40 lb. water softener salt bags that Walmart has all the way in the back of the store even though everyone here needs them.