AmAzon versus WAlmArt: A Price War for online supremacy Walmart, the world’s largest retailer, and

Amazon, the world’s largest online merchant, are fighting a war for online supremacy. The weapon of
choice? Prices, at least for now. But in the long run, winning the war will take much more than low
prices. Pricing Understanding and Capturing Customer Value retail sales. Walmart captures most of its
business through its 11,000 brick-and-mortar stores—online buying accounts for only a trifling 2.8
percent of its total sales. But this battle isn’t about now, it’s about the future. Online sales are growing
at three times the rate of physical-world sales. Within the next decade, online and mobile buying will
capture as much as a third of all retail buying. Because Amazon owns online, its revenues have soared
20 percent or more annually over the past four years. Meanwhile, Walmart’s total sales growth has
pretty much flatlined during that period. Amazon’s revenues reached the $100 billion mark faster than
any other company in history. Amazon has shown a relentless ambition to offer more of almost
everything online. It started by selling only books but now sells everything from books, movies, and
music to consumer electronics, home and garden products, clothing, jewelry, toys, tools, and even
groceries. Thus, Amazon’s online prowess now looms as a significant threat to Walmart. If Amazon’s
expansion continues and online sales spurt as predicted, the digital merchant will eat further and further
into Walmart’s bread-and-butter store sales. Walmart to Amazon: Let’s Rumble” read the headline. Ali
had Frazier. Coke has Pepsi. The Yankees have the Red Sox. And now, the two retail heavyweights are
waging a war all their own. The objective? Online supremacy. The weapon of choice? Prices, at least for
now—not surprising, given the two combatants’ long-held low-cost positions. Each side is formidable in
its own right. Walmart dominates offline retailing. Its price-driven “Save money. Live better.” positioning
has made it far and away the world’s largest retailer, and the world’s largest company to boot. In turn,
Amazon is the “Walmart of the Web”—our online general store. Although Walmart’s yearly sales total
an incredible $482 billion, more than 4.5 times Amazon’s $107 billion annually, Amazon’s online sales a