when amazon started selling more than
just books in the late 1990s it suddenly
entered into a rivalry with the biggest
name in retail
always low prices always walmart
walmart has been at the helm of american
shopping for 58 years
it employs more people than any other
company in the world and 90 percent of
americans live within 10 miles of one of
walmart's more than 4 700 u.s stores
the staggering size of walmart kind of
escapes people it's the largest
corporation in the world
in terms of revenue yet when it comes to
e-commerce
amazon is the clear leader with 38.7
percent of the market share compared to
walmart's 5.3
and with the global pandemic shifting
shoppers behavior for good
dominance in online shopping is now
paramount
so if you're that second site you got to
be really good
you don't have to be as good as amazon
because no one will get there
that's utopia in perhaps its clearest
competitive move against amazon to date
walmart is now launching walmart plus
the membership program is meant to rival
amazon prime
offering benefits that can't be
replicated online these guys are toe to
toe and nobody wants to stop swinging
nobody wants to back down you know the
consumer is ultimately the beneficiary
clearly
here's a look at how walmart plus
compares to amazon prime
and all the other ways walmart is trying
to catch up as the pandemic makes online
shopping an increasingly crucial part of
doing business
walmart has been working behind the
scenes since at least 2018 to create a
competitor to amazon prime
from our data study we found that
two-thirds of people that already joined
are in a premium loyalty program would
join another one
although the landing page says walmart
plus is coming soon the pandemic delayed
its planned release in the spring
walmart's stock surged seven percent
when it looked like it would launch in
july but that didn't happen either
when walmart plus is available members
will likely pay 98 dollars for benefits
like
unlimited same-day delivery on groceries
from the 1600 of its 4 700 plus stores
that do grocery delivery now
when we did our data study 81 of the
consumers joined amazon prime because of
faster free shipping
only two percent joined because of
grocery delivery so i think it's a real
opportunity to leverage
what they already have in groceries and
maybe what prime doesn't
and just this week walmart announced a
partnership with instacart testing out
same-day grocery delivery in four
markets across california and oklahoma
other perks are rumored to include early
access to sale events
discounts at gas stations outside of
walmart's and walmart-owned sam's club
stores
and reserved parking spots in store lots
as you think about prime
150 million why would you go head to
head with that if you take a unique
approach which it sounds like walmart is
doing
you might be able to get a lot of those
customers
amazon launched prime for 79 a year in
2005 at a time when walmart's profits
were greater than all of amazon's
revenue
if you look back at 2005 prime had one
benefit
fast and free shipping two-day shipping
which was like unheard of
fifteen years later some 150 million
prime members pay 119
a year for one day shipping on more than
10 million items with no minimum
purchase amount
same day shipping on some 3 million
items 2 hour grocery delivery in 2000
plus cities
deals and sales events like prime day
and access to amazon's entertainment
branch
prime video amazon music prime reading
prime gaming and amazon photos
it's a pretty compelling value
proposition and that's what anyone will
have to deal with
if they want to try to compete with
prime walmart doesn't have any
entertainment offerings of its own now
that it sold voodoo in april
prime members make up about 65 of
amazon's customers and the program has a
95
renewal rate after two years walmart
started chasing this type of loyal
customer in may 2019 by offering free
next day delivery on orders over 35
less than a month after amazon announced
its default one-day shipping
with walmart plus all orders will
default to free one-day shipping just
like prime
despite the launch of walmart plus and
free fast shipping walmart still lacks
one big thing that amazon has
sheer volume of inventory
walmart.com has about 50 000 vendors
selling items online while amazon has
8.7 million
that's why in 2016 walmart bought
discount online retailer jet.com for 3.3
billion dollars
the acquisition brought relationships
with a slew of brands that were already
comfortable selling on jet.com
they are on track to more than quadruple
their
um online business since they acquired
jet
it was an uh-oh moment for every other
brick and mortar retailer
because now the biggest brick and mortar
guy is now you know
moving heavily online e-commerce is a
scale game and you want to get as much
leverage as you can on your fixed
infrastructure
and as you get bigger cost of goods goes
down and you get more leverage
mark lori spent two years at amazon
before breaking off to start jet.com
working to undercut prices from the
ecommerce megastores
walmart's purchase of jet.com was the
big move that brought it into the big
leagues of online shopping
when the deal was made in 2016 laurie
signed a five-year contract to run
walmart's e-commerce division
i'm so excited to be at walmart having a
lot of fun we're going to keep talking
to you because i think that you're the
most inventive man in retail today
walmart shut down jet.com in may but it
had already brought an entirely new
branch of online sellers onto its
marketplace
walmart's ceo doug mcmillan says he
would buy it all over again
if you look at the trajectory of our
business it changed when we made that
acquisition
and we've been able to attract brands to
walmart.com swell
ray-ban and champion
historically walmart.com didn't sell
things from third-party vendors
but since the jet.com acquisition the
number of products sold on walmart.com
has grown up to 10 times higher
and the number of sellers on its site
doubled just in the last year
so they started attracting more brands
they retooled their website to be
more streamlined and more intuitive uh
more user-friendly
and last year walmart partnered with
advance auto parts
walmart was not going to be a 100
000 sku auto parts retailer on its own
they get that with advanced auto this is
probably the largest third-party
relationship
that any online retailer has with a
brick and mortar retailer
and in an effort to reach a new type of
customer lori spearheaded the purchase
of several specialty apparel companies
like bonobos modcloth and eloque
although some have been sold again since
a big portion of walmart's door
customers are lower
to middle income i think what they tried
to do here
and through the jet.com brand was to
continue to go up market
and go for more profitable customers
urban millennials and then they also
introduced the service jet black which
is an upscale personal shopping service
for a large fee jet black allowed new
york walmart customers to text orders to
personal shoppers for home delivery
but walmart shut it down in february
after it only saw about 600 active
members
if we think about the dynamics of the
very very affluent and wealthy today
i don't know if walmart is necessarily
the
company to be housing a brand like that
but in june walmart pivoted again
announcing a major partnership with
shopify often referred to as the king of
mom and pop retailers
shopify helps more than 1.4 million
small businesses run their online stores
now these small businesses have a
channel to try selling on walmart.com
for now walmart says it's adding 1200 of
shopify's top merchants to its site in
2020.
walmart wants a curated assortment on
the website i mean amazon has a very
wide-ranging third party business
and with that comes from risk the
partnership with shopify
is really important i think it's very
strategic and i do think it
is an attempt to pull away those
third-party sellers
on amazon there's been kind of a lot of
tension between third-party sellers
and amazon on july 29th jeff bezos
testified before congress for the first
time in amazon's 26 year history
partly in response to questions about
reported use of third party seller data
to develop amazon's own competing
products
the house judiciary committee is
investigating whether amazon along with
apple
facebook and google need to be governed
by stricter anti-trust laws
why should a third-party seller list
their product on amazon if they're just
going to be undercut by amazon's own
product owned product as a result of
data you take from them
i think what what i want you to
understand i think is important to
understand
is that we have a policy against uh
using individual seller data to compete
with our private label products you
couldn't assure miss jackpot that that
policy isn't violated routinely while
amazon is battling to keep the trust of
its third-party sellers
walmart still has a long way to go if it
wants to catch up with the millions of
third-party sellers that make up more
than half of amazon's sales
the walmart marketplace is a lot smaller
so you could be
quote unquote crushing it on page one on
walmart and you're still not getting
that many sales
still walmart has one big long-standing
advantage over amazon
it's 11 500 global stores if you're a
third party seller like if you can get
into brick and mortar walmart
you're going to crush whatever sales on
amazon you're doing
for sellers choosing where to reach
customers stores are a big bonus
and much more scalable so this diet pill
company i worked at they had 30
different products that we were selling
on amazon i launched a whole bunch of
them we brought their sales from 1
million to 3 million and i thought that
was like the greatest thing in the world
but
that was nothing because i would see
purchase orders come across my desk for
the walmart brick and mortar side for
the walmart stores they would be like
two million dollars
just for like one region of the united
states walmart's stores also help keep
down its costs in the most expensive
area of online retail
shipping if you can leverage those
stores as your fulfillment centers
meaning if i'm going to purchase
something and i'm in the philadelphia
area
have it come from the store that's three
blocks from my house as opposed to
virginia
you know price points go down and speed
goes up amazon has been spending wildly
to try and control the expensive
shipping
process but it's 175 fulfillment centers
and own network of planes trucks and
contracted delivery drivers
don't come close to the reach of
walmart's 4700 stores that allow its
trucks and drivers to travel a fraction
of the distance
walmart had the advantage of getting
product from distribution center to the
store
and then the consumer handles the last
mile for a lot of it
walmart uses its stores as distribution
centers for products
but also has its own dedicated network
of warehouses without a front-facing
store
walmart remains dominant in another
sector that's largely dependent on
brick-and-mortar stores
groceries we're not very densely
populated
and so it's hard to service in an
e-commerce model
grocery so what that means is that
amazon
is really at a little bit of a
disadvantage relative to walmart they
have stores
within 90 of the population in the
united states grocery sales account for
more than half of walmart's u.s revenue
making walmart the nation's biggest
grocer
walmart's been selling groceries
directly to customers since the 80s
and the online sale of groceries is now
boosting walmart's overall
online sales the percentage of all u.s
grocery sales happening
online is set to double from 20 in 2019
to 35 to 40 percent this year and next
you find your grocery
vendor and you tend to stick with them
you also get a treasure trove of data
from grocery customers about their
preferences and you can use that data
and i believe walmart will use that data
to sell them other things
i think that walmart is going to win in
this grocery battle
versus amazon when amazon bought whole
foods for 13.7 billion in 2017
it was a clear move to compete with
walmart but with roughly 475 stores
whole foods has about a tenth of the
locations as walmart does in the us
you cannot find a tougher
brick-and-mortar segment to get into
than food you gotta manage a million
vendors produce is hard
meat's tough and they they chose to get
into that business
they're still learning then in 2019 a
month after amazon announced free
two-hour grocery delivery for prime
members in 2000 regions
walmart announced a membership program
offering unlimited grocery deliveries
from 1400 stores
it costs 12.95 a month or the same 98
annual fee of the new walmart plus
membership or for an extra seven dollars
a month walmart will deliver groceries
straight into your fridge in a handful
of cities
digital grocery is the next big
battleground in e-commerce it's a one
trillion dollar retail category
that is today the least penetrated
category online so as it continues to
grow at outsized rates
there are tens of billions of dollars
at play in one survey before the
pandemic about 39
of us consumers reported having shopped
online for groceries at least once
by may that number was nearly 80 but how
many people are going to go back to
conventional shopping or how many people
are going to stay with buying their
staples online because they can
while the pandemic boosted the
importance of fast grocery delivery
walmart has an even faster more cost
effective option
curbside pickup you pull up they put it
in the car and you're gone
that's a big weapon while this is an
option at whole foods stores
customers need to wait for regular
amazon.com purchases to be delivered
in july prosper analytics found that 62
percent of adults are shopping in stores
less
so as the pandemic pushes so many online
for their shopping walmart's name
recognition with older shoppers is also
a plus
my parents as an example they're not uh
the most robust online shoppers but when
this pandemic hit like
they had no choice but they've been to a
walmart before when forced
to purchase things online you're going
to go with who you know and who you
trust
walmart hired 200 000 employees during
the pandemic to help clean stores and
keep items in stock
it's giving a third round of bonuses to
hourly employees working during the
pandemic for a total of 1.1 billion
dollars in bonuses this year
while facing backlash for sick and dying
workers
now for the first time in 30 years
walmart will be closed on thanksgiving
day
it's also cutting some corporate roles
as it merges its online and store
businesses
amazon meanwhile postponed its annual
prime day event that usually set sales
records in july
it offered one-time bonuses to
front-line workers totaling 500 million
dollars and gave workers a two dollar
per hour raise from march to may
it hired 175 000 workers to keep up with
demand during the pandemic
but faced backlash for keeping all its
warehouses operational despite worker
deaths
still in the second quarter of 2020
amazon's first party sales were up 48
year-over-year with third-party sales of
52
walmart's online sales rose 74 in the
first quarter of 2020.
i mean you could argue during the
pandemic that walmart's walmart's taking
a bit of a lead
because they haven't publicly had the
delivery delays the product to the
consumer delays that amazon has had
when i began reporting on the pandemic
in march i discovered that amazon was
actually trying to get shoppers to buy
less fewer non-essential orders meant
they could focus on shipping things like
hand sanitizer and masks to hospitals
and state agencies
that's when i decided to give walmart a
try my last order on amazon was back in
february which was before they had a lot
of those shipping delays that were
caused by supply chain issues and
such a big surge in demand when i stayed
home i decided to get my groceries from
walmart and they usually came the same
day or the next day
when i ordered other items on
walmart.com they always arrived within
the delivery window and i never had any
delays
in san francisco sometimes they even
came the next day
they still don't come anywhere close to
amazon when it comes to the selection of
items
that you can get through online and get
to your house within one or two days
so i think right now walmart and amazon
are locked in a steel cage death match
to become
the country's everything store so what
does walmart have planned as it
continues trying to catch amazon in
e-commerce
for example walmart launched its own
voice assistant called ask
sam in july for employees to use to help
shoppers find
products and prices in stores they're
trying to find ways to use those
physical stores in new ways not just
distribution
but also you know they're talking about
medical and financial and
edge computing and all of these other
things that really leverage the stores
for now the launch of walmart plus has
analysts hopeful that one day it could
at least provide a second
option for amazon customers to turn to
amazon has sent a very high bar
but they've also given people the
playbook to kind of follow
and then once you figure out how to
integrate online into your stores
there's immense profitability as well
for the brick and mortar guys