Acquisitions, Shipping, and How Walmart is Trying to Stay Ahead of Amazon
This is a guest post by e-commerce writer Hendrik Laubscher. Check out his blog for more of his work.
Walmart is trying to acquire its way ahead of Amazon. In the last year, Walmart has spent almost $4 billion dollars to counter the threat that Amazon has delivered to the retail industry. Marc Lore, an ex-Amazon staff member did the unthinkable - he raised millions of dollars and then rekindled his relationship with Walmart to ensure that they acquire his new creation, Jet.com. In doing so, Doug McMillon has essentially thrown his legacy atop of Walmart at Lore in hopes that he can turn the tide against Amazon.
Walmart has in the last 6 months started doing things that indicate that they are on the right track against their 21st century leading competitor. Buyers are now finally looking at retail and online for Walmart (that summed up the previous head of Walmart.com US' e-commerce attempts to make gains against Amazon). Walmart's supply chain has also significantly been restructured to meet digital challenges. Lore has started a program in which he has leveraged an asset that Walmart has had since the late 2000’s - 4500 retail locations - all spread over the US.
That’s why I’m so excited to announce that, starting on April 19, we are going to begin offering a discount on eligible, online-only (non-store) items that customers buy online and ship to any Walmart store for pick up. Pickup Discount* will initially be available on about 10,000 items. We will then roll out the discount to more than one million of the most popular items by the end of June."
We’re creating price transparency to empower customers to shop smarter and choose what’s best for them. Now, they can either pick up and save even more money, or ship two-day for free to home, without paying for a membership.
Signs indicate that Walmart's digital future will offer two brands for customers to interact with; Walmart.com and Jet.com. Bloomberg Gadfly notes that "Jet says this scheme gives consumers choices. That might appeal to a subset of shoppers, much like daily deals, auctions, and other gimmicky retail models. But jumping through hoops to cut a retailer's costs shouldn't be a shopper's job."
Currently they provide two channels that ensures two different demographics are catered to. It also provides Walmart with another channel to sell their house brand products to more affluent customers. However, this arrangement also serves another purpose. Brands that do not want their products to be sold on Walmart.com are able to sell their products on Jet.com.
While the battle between Amazon and Walmart/Jet.com continues, brands are the biggest losers as both businesses want to ensure they serve their customers with the best deal out there.
Two challenges to overcome
Amazon is seen as the digital version of Walmart, and Walmart is seen as the physical retailer similar to Amazon. The two businesses share various traits, including mercenary behavior for third parties. Sellers are pushed to provide the lowest price to ensure repeat customers on both, so selling on Walmart vs Amazon is similar in many ways.
What any e-commerce marketplace needs to accomplish in order to make it is trust and habit. Strategies that promote these are key to platform success.
Walmart battles a brand (Amazon) that is loved and trusted by customers. Amazon has customer-centric return policies, frustration free packaging and provides new products if certain products need to be returned.
According to GeekWire - Amazon’s brand is more relevant to millennials in America than any other company.
Here’s more from Prophet on Amazon:
A powerhouse of pragmatism, Amazon is No. 1 in every measure of usefulness and dependability: “It makes my life easier.” “It delivers a consistent experience.” “It’s available whenever I need it.” Members not only love the ease of shopping with Prime. But Amazon also charms them with devices (Fire and Kindle), original programming (award-winning Transparent and Mozart in the Jungle) and help around the house (Thanks, Alexa!).
In order to compete against Amazon, Walmart must utilize strategies that increase consumer trust in their service.
Amazon Prime has encouraged repeat shoppers and made shopping on Amazon a habit. In modern day America, many individuals and families lack time, which means Amazon's strategies like next-day delivery and the convenience of shopping from home builds habits. When someone wants to make a purchase, they go to Amazon.
Amazon has had the head start in building habits, and has rolled out other habit-forming offers to win buyers over from Walmart. In order for Walmart to compete, they need to do the same. For example, Walmart has positioned the Jet.com acquisition as their opportunity to access a new demographic, millennials. Would these same customers leave their $99 per year Amazon Prime subscriptions to shop online at Walmart.com and then collect in store?