Amazon VS Walmart

On Collision Course

Bhavika l Karthik l Pushpa

Group 2
Overview of companies
Financial performance

Amazon(US$ Walmart(US
) $)

Revenu
$177.87 Bn $495.67 Bn
e

Operati
ng $4.1 Bn $20.43 Bn
Profit

Market
$700 Bn $262 Bn
Cap.
Online sales of Amazon in US
Employee, asset and inventory productivity of Amazon and
Walmart

9.00 8.00

8.00 7.00 While Walmart has better

7.00 inventory productivity &
6.00
Asset management due to
6.00
5.00 efficiency in supply chain
5.00 and assets, the employee
4.00
4.00
productivity of Amazon is
3.00 might higher bringing in
3.00 efficiency in working
2.00
2.00

1.00 1.00

0.00 0.00
Inventory productivity Asset productivity (ROA) Employee productivity
Walmart Amazon
What accounts for the difference in online penetration between
books (about 50% sales are online), apparel (about 25% sales are
online) and groceries (about 1% sales are online) in the US?
BOOKS (50% sales Apparel (25% sales Groceries (1% sales
are online) are online) are online)
Books are easy to For Apparels, it includes To purchase groceries
check and purchase customers attention to online, customer has trust
through online. There detail, size, colors etc. The issues with the quality.
is no added complexity preference of users also
in purchasing books. defers based on the
apparel they going to buy.

Returning a book is Customers prefers to visit Customers prefer the

highly negligible, which physical store for traditional stores (check
promotes customer to apparels, where they the expiry, quality, etc).
purchase online don’t have to go through
select, return, replace
processes. Customers
Can't Try Before They Buy
 

Limited consumer High consumer High consumer

expectation expectation expectation

Low competition High competition High competition

What is the value network, and distinctive capabilities underlying
each of the two business models (Amazon online versus Walmart
Supercenters)
Walmart Amazon
 Walmart is based on a low-  Amazon customers are mostly
price/high volume business technology oriented and offered
model. Pricing strategy was the convenience with offers and buyback
corner stones of Walmart’s points.
success.  
   Amazon led the growing ecommerce
 Walmart’s dominates the retail industry. Value chain network is
industry. Value chain network is dominated in online channels.
dominated in offline retail  
channels.  Overcomed the bottleneck of delivery
  cost and delivery time by introducing
 Walmart’s strategy to reach Amazon Prime. Through Prime,
small businesses and individuals Amazon has redefined the industry’s
with Sam’s club is a success. value-proposition by making faster
  shipping core customers expectation
 Walmart’s continuous innovation  
in technology has improved the  Undertook innovative steps like one-
work processes such as VMI click checkout system, launch of
(vendor managed Inventory) “Marketplace” which allowed third-
which has resulted in 100% order party seller on the platform.
fulfillment with lowest
distribution cost in the industry.
 
 Walmart’s adoption of cross
docking has eliminated the need
for storage which also helped to
keep down inventory and
transportation costs. This intern
reduced delivery time.
Evaluate the initiatives taken by Walmart to meet the
omni-channel challenge. How should it evolve in the
future?
The initiatives taken by Walmart to meet omni-channel challenges were –
Set up of Walmart labs to deep dive in data driven channel approach, technology and
innovation in different channels that could be used. The technological arm aimed at
delivering operational efficiency by optimizing business processes irrespective of
channels. – This was as a separate R&D developed to ensure smooth functioning of omni
channel approach. It gave the retailer an edge to constantly innovate in the market
The walmart app was another innovation by the retailer – it made the entire consumer
shopping experience easy and convenient with up to date information on products,
automated checkout process, scan etc – This is a innovative approach because Walmart
happened to use its strength – offline retailing with additional digital features. This way
the retail giant could ensure efficiency in traditional channel but bought in effectiveness
with digital features thereby creating a successful hybrid structure
Mobile express returns to ensure easy return process for consumers – This is built through
on consumer insight, consumers often find the return process a hassle which limits their
buying experience. The mobile express catered to solve the challenge
Personalized voice shopping – To ensure ease of use using voice feature. This is again built
on consumer insight where consumers are moving away from typing to audio services on
google
Evaluate the initiatives taken by Walmart to meet the
omni-channel challenge. How should it evolve in the
future?

How should Walmart evolve the Omni channel experience in future?

With the increased internet penetration and move of consumers to online e-tailers for groceries in
the post covidian scenario, Walmart should capitalize on its traditional channel approach and
network to ensure smooth online delivery
It could come up with a specialized membership service like Prime to bring in advanced delivery
features
It could utilize analytics and data in its supply chain to predict consumer orders and thereby offer
them personalized delivery services
It could offer monthly model for regular consumers ordering groceries and other perishable items
It could offer 3-D shopper experience through online website, making consumers feel in a retail
shop being at home. This would ensure real time handpicking of groceries and other item through
the website
What are the initiatives taken by Amazon to develop an omni-
channel presence? What challenges does it face in the adoption of
an integrated model, especially when dealing with groceries and
apparel?
The limitations of an online store have hindered the sales in 2 categories which is apparels
and groceries. Sales has boosted with the introduction of Prime in those two categories.
Amazon Prime is an analogue to membership discount stores like Costco or Sam's Club.
Invest in the membership and you get benefits. The primary reason to invest in Amazon
Prime is the promise of free (and increasingly fast) shipping. Prime is pure
convenience. It eliminates the biggest reason for cart abandonment (shipping costs), and
creates a lock-in effect. To Prime members, Amazon is the first, and often only, destination
when shopping
Amazon established a brick and mortar presence in order to sustain its high growth rate
Out of box initiatives such as self service kiosks, hub locker delivery system, for apartments
Its truck fleet that helped deliver to customers faster & its retail invention of Amazon go which was automated
with no human interaction were breakthrough innovations
Amazon Go, complete automated convenience store with no checkout required in Seattle, US.
Amazon has opened bookstores in addition to pop-up stores across US
Amazon acquiring Whole Foods, has broaden its physical footprint
What are the initiatives taken by Amazon to develop an omni-
channel presence? What challenges does it face in the adoption of
an integrated model, especially when dealing with groceries and
apparel?
The Challenges –
The challenges that it faced in the integrated model were firstly the costs.
Amazon worked on the mantra of lowest prices for customers and integrated
channel led to costs of staff, rental, utilities, instore etc.
For groceries, consumers preferred to shop in store as they preferred fresh and
good quality veggies hand picked by them
Consumers were price sensitive and had delivery preferences in terms of
groceries
There was additional fulfilment costs for retailers operating traditionally
The frequency of orders declined due to additional costs as compared to online.
And as the bucket size was not large, incurring these costs affected profitability
THANK YOU