What happens when the largest brick-and-mortar retailer and the largest eCommerce retailer try to take down one another? Big purchases, new innovations – chaotic, big-time eCommerce competition. It is all unfolding before our eyes in the duel of the retail giants: Walmart vs Amazon. Amazon is the largest online retailer, while Walmart is the largest retailer period. Amazon has such a large presence in the eCommerce world that Walmart desperately wants to chip away at. To do so, it has made some large purchases of many pre-established eCommerce websites. And, in turn, Amazon responded by stepping further into the brick-and-mortar world with a hefty purchase of its own. Both are working to expand in these respective areas and are trying to do so by expanding their businesses and by creating innovative technologies and services that will stand out to customers and put them on top.
eCommerce Competition: The Landscape
Amazon accounts for a whopping 43% of online sales in the US. That is an extremely impressive percentage when considering that Amazon is one of millions of online retailers. To make up almost half of an entire industry is almost unheard of. So, when it comes to eCommerce, Amazon is clearly in a league of it’s own. Walmart is trying to join that league. It has a ways to go, but is beginning to make some decent strides. Walmart recently announced that its online sales increased by 63% in the first quarter of 2017 – an impressive accomplishment. However, it still has a lot of work to do if it wants to pose a real threat, as Amazon’s online sales are still currently about six times greater than Walmart’s.
Walmart is the largest retailer in the world and has had some impressive eCommerce accomplishments. But it still has a ways to go in its eCommerce department if it truly hopes to compete with Amazon in this field. In an attempt to improve its online presence, Walmart has begun to buy out multiple online retail sites. In August 2016, Walmart bought Jet.com. This purchase made a big statement as Jet was a fairly large presence in the world of eCommerce. Fairly large, yes, but no where near Amazon-levels of course. Still, the acquisition of such a site is a large step in breaking down that immense wall that Amazon has built in the world of eCommerce. ShoeBuy, ModCloth, and MooseJaw are a few other businesses that they purchased. But how many eCommerce sites with conjoined-word names must Walmart buy? At what point will it stop making ripples in the world of online retail and instead make waves like Amazon? That question remains unanswered for now, but, as its online sale growth proves, Walmart is surely heading in the right direction.
The Power of Amazon
To say that Amazon is a powerhouse would be an understatement. It is a massive, daunting, competitive force in the eyes of every online retail business. Amazon is the largest online retailer in the world and the third largest retailer overall. Its sales have hit $136 billion while their market value sits at an astounding $427 billion. As Walmart has made large purchases of eCommerce sites, Amazon has crept into the brick-and-mortar world. It began with their Amazon retail store locations like Amazon Books, which has eight locations nationwide, with five more to be opened soon. It also has an Amazon Go store planned, which will be discussed in greater detail later.
And just recently, Amazon announced that they plan to purchase Whole Foods. Shoveling out a large $13.7 billion, Amazon bought the grocery chain in an attempt to make their mark in the brick-and-mortar landscape. Whole Foods accounts for 1.2 percent of the U.S. food and grocery market, while Amazon already owns a mere 0.2 percent. So why the grocery market? Well, Walmart controls the largest share, a whopping 14.5 percent of all sales. Amazon will now hold 1.4 percent, when combining its current share with Whole Foods’. This should not water down the importance of Amazon’s buying of Whole Foods, though, as it is still a very big deal. This is Amazon’s first major venture into the world of brick-and-mortar retail and it is unclear what will come of their new acquirement. It is a telling sign, though, that Amazon is just as serious about getting into brick-and-mortar selling as Walmart is about online selling.
Customer Benefits and Technological Advances
To stand out to consumers, Walmart has recently begun offering shipping incentives that rival Amazon’s ‘Prime’ service. While Amazon offers free two day shipping to those who pay for a Prime membership, Walmart now offers free two day shipping to anyone on purchases of $35 or more, no membership required. This furthered the eCommerce competition between the two. This is big, because an Amazon Prime membership is $99 a year, making its “free” shipping not so free. It is important to note that Prime does offer a number of other benefits too, though. Still, it is clear that if someone is making a purchase of $35 or greater, it makes more sense to buy from Walmart, where two day shipping is free without a membership charge. Walmart has also been offering discounts on products when customers order online and then go pick up their purchase at their local store. These incentives build customer loyalty and will surely go a long way.
Meanwhile, Amazon is arguably more focused on creating groundbreaking technology for the brick-and-mortar world. As a part of their expansion into physical store locations, Amazon recently got a patent on technology that would limit customers’ use of their mobile devices in stores. This method would block or redirect people’s attempts at comparing prices of competitor stores on their phones when connected to the Wi-Fi at the store. The patent describes the ability to even intercept this comparison shopping by sending a coupon to the phone or having a salesperson come to talk to them. This technology is clearly a large innovation in retail shopping and can work to further Amazon in the industry.
Amazon has also created a store called ‘Amazon Go’ in which no checkout process is required. The store, which is still in the beta phase, allows customers to go into the store, scan their phone, pick up whatever they need, and walk out. The store keeps track of what they pick up and then charges them upon leaving. This technology, once perfected, will make shopping experiences much simpler and quicker by implementing eCommerce techniques into brick-and-mortar stores.
Looking to the Future
So now we have two retail giants battling it out for maximum sales and popularity. In one corner, we have Walmart, the number one retailer trying to expand their eCommerce businesses. In the other corner is Amazon, trying to reinvent the brick-and-mortar shopping experience. It will be interesting to see what Amazon does with Whole Foods and how they will implement their new technologies. Thanks to these innovations, Amazon is going to be more fun to watch than Walmart. Both companies have a lot of work to do to get to where they want to be, making for a long stretch of eCommerce competition in the future. Will Walmart reach Amazon levels of eCommerce success? Will Amazon change the brick and mortar landscape as we know it by utilizing eCommerce practices? Stay tuned.
- Dan Kogan
- July 25, 2017