Originally published on September 7, 2017.
Walmart has over 11,000 stores and clubs in 28 countries, which explains how 60% of the U.S. population visits a Walmart store at least once a month. Yet, in the realm of e-commerce, Walmart’s $14 billion sales drastically lag behind Amazon’s $99 billion in 2016. Although second to Amazon in e-commerce, Walmart isn’t willing to accept second place. The increasing popularity of online shopping is forcing Walmart to rethink how they can best reach consumers. With Amazon considering the same question, we are left to ask—who will win?
According to Greg Petro, a Forbes Contributor, the best way to analyze the question is to consider the following: of the two retailers, which one best uses data to attract consumers, and most importantly, which one will be the first to attain total supply chain mastery?
For the former question, Amazon is currently the answer. Amazon uses an algorithmic approach to present particular products to its customers, and also uses dynamic pricing strategy to make consumers think they have cheapest prices for those products it presented. On the other hand, Walmart.com, alone doesn’t collect consumer data at the same volume as Amazon. However, Walmart is on the path of catching up. With its $3.3 billion acquisition of Jet.com, Walmart now has an online platform that can compete with Amazon, since it takes into account customer shopping data, the basket size of each order, and the particular merchandise it sells.
For the latter question, it’s too soon to say. Amazon is the leader in online retail, whereas Walmart is the leader of brick and mortar stores. With Walmart strengthening its online presence, and Amazon establishing physical stores, and its recent acquisition of food retailer Whole Foods, each retail company is pushing more into each other’s domain. Therefore, according to Petro, the real question is will Amazon build a massive distribution network and physical stores that beat Walmart’s, before Walmart can add major digital capabilities to its own supply chain and fuse it with its stores?
Dan Bartlett, Executive Vice President in Corporate Affairs at Walmart (and UT alum!), Austin, is confident his company will win this fight. He may be right, but the Whole Foods acquisition gives Amazon a big boost forward on the battle lines, Previously, Amazon only had very limited physical retail stores, and only one, Amazon Go, a convenience store with automated checkout, carried diverse merchandise, the rest being bookstores. No doubt the acquisition of Whole Foods will have provide lots of education for Amazon, but also lots of potential for clashes in corporate cultures between the upscale selective food operation, and the efficiency and mass-market oriented Amazon. With Walmart’s strong commitment to its online transformation. The competition can only intensify.
At W2O Group’s PreCommerce Summit at SXSW, Walmart’s Bartlett discussed new strategies that the company is employing to increase its relevancy with consumers. One of those includes Walmart’s partnership with a venture capital firm to build bots that will be used to predict potential issues and therefore give them the hindsight to avoid them. The company is also working with IBM Watson to power an internal app that does a tone sentiment analysis of Walmart senior executive communications. The app would also compare Walmart’s communications to hundreds of other CEOs to see what resonates, and doesn’t, with audiences. In evaluating what radiates credibleness with consumers, Walmart will use this information to improve its executive coaching and writing. Clearly the company is committed to all sorts of innovation.
Want to hear more about Walmart’s plans? Watch the discussion between Dan and W2O Group’s Bob Pearson:
Read more posts by Cindy Ramirez