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Businesses The Internet

Walmart Plays Catch-Up With Amazon 203

HughPickens.com writes: According to James B. Stewart in the NY Times, for the past 16 years Walmart has often acted as though it hoped Amazon would just go away. When Walmart announced last week that it was significantly increasing its investment in e-commerce, it tacitly acknowledged that it had fallen far behind Amazon in the race for online customers. Now, the magnitude of the task it faces has grown exponentially as e-commerce growth continues to surge globally. "Walmart.com has been severely mismanaged," says Burt P. Flickinger III. "Walmart would go a few years and invest strategically and significantly in e-commerce, then other years it wouldn't.Meanwhile, Amazon is making moves in e-commerce that's put Walmart so far behind that it might not be able to catch up for 10 more years, if ever."

In 1999, Amazon was a fledgling company with annual revenue of $1.6 billion; Walmart's was about $138 billion. By last year, Amazon's revenue was about 54 times what it was in 1999, nearly $89 billion, almost all of it from online sales. Walmart's was about three times what it was 15 years before, almost $486 billion, and only a small fraction of that — 2.5 percent, or $12.2 billion — came from Walmart.com. Walmart's superefficient distribution system — a function of its enormous volume and geographic reach — was long the secret to Walmart's immense profitability. Ravi Jariwala, a Walmart spokesman, says that Walmart is building vast new fulfillment centers and is rapidly enhancing its delivery capabilities to take advantage of its extensive store network to provide convenient in-store pickup and adds that 70 percent of the American population lives within five miles of a Walmart store. "This is where e-commerce is headed," says Jariwala, which is to a hybrid online/in-store model. "Customers want the accessibility and immediacy of a physical store," along with the benefits of online shopping.
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Walmart Plays Catch-Up With Amazon

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  • by SethJohnson ( 112166 ) on Friday October 23, 2015 @11:27AM (#50787799) Homepage Journal
    As the summary suggests, Walmart does have an advantage in its distribution network and storefront locations. At a greatly-reduced cost, Walmart could very quickly compete with Amazon for Same-Day delivery service if that proves to be lucrative.

    Additionally, in the not-so-distant future, when autonomous vehicles become the norm, consumers could order online and send their own car to the Walmart distribution center to be loaded up with the groceries, etc. to reduce the cost of deliver.
    • Yeah send my car to Wallyworld alone. Any convenience or cost savings will quickly be whittled away due to the performance of thier employees whether it be fuck ups in fulfilment or boogers on the door handle. They need to become a more professional business altogether online and off for this to work. Who can honestly view themselves typing in walmart.com with a straight face?
      • Last year, I bought some tires at Walmart using their ship-to-store program, and got them installed at their auto center. Here's how it went:
        Ship-to-store is the repurposed layaway counter, and isn't actively staffed. Instead, you ring the associate using a kiosk.
        No associate showed up. Had to ring at least twice. About 15-20 minutes in, an attendant working the floor asked what the deal was, and I guess he tracked someone down. I'm not sure if the notify attendant functionality was broken or the associate

        • I have two walmarts within 20 minutes of my house. One is much larger, clean, well stocked, and staffed with mostly adults the other is a much older building it's always dirty, right next to the college, never has what you are looking for, staffed mostly by distracted students both college and highschool.

    • That was going to be their model. Thing is, Amazon has been building up same day service for the last 5 years. They're working on Autonomous vehicles too. Meanwhile Walmart has grocery delivery, even for 'free' at my company, but they charge a premium for all the items you buy and you don't get to pick your produce so the value isn't really there.

      It's looking more and more like online will kill brick and mortar. What I'm wondering is what's going to happen to all those property owners when it does. They
      • Don't worry about it. In the cities and other places where people congregate there will always be a place for retail spaces. In rural areas less so but yes they will go gently into that good night. No violence except in your mind. Industries come and go all the time. Real estate is reutilized all the time.

        As a counter point - schools, as currently operated, should go out of business and would if not for an entrenched government - subsidized monopoly. Now that waste of talent, time and real estate will s
    • in the not-so-distant future, when autonomous vehicles become the norm

      That's optimistic.

    • by jlp2097 ( 223651 )

      As a European, what's Walmart? But seriously, let me give you some more global perspective - besides UK, Japan, China and South Africa there is not really much of a Walmart presence outside of North and South America. They will never catch up to Amazon, which is present just about everywhere in the world.

      Amazon has the hell optimized out of their logistics and again, is present just about everywhere. There is not really much of an advantage (besides storefront locations) that Walmart has.

  • by crow ( 16139 ) on Friday October 23, 2015 @11:27AM (#50787801) Homepage Journal

    Walmart believes "Customers want the accessibility and immediacy of a physical store." That is why their online business is doomed to fail. Yes, sometimes you just want it right now, but then you'll drive to Walmart or whatever local store will have it and buy it. But often you want the real online experience with unlimited selections and no hassle with trips. Why would I buy something online and then drive to pick it up?

    Yes, Walmart has a huge and efficient distribution system, but can they really leverage that for online sales? When stocking stores, they ship large quantities to each store. For online sales, it's small quantities of a much larger variety. You have to support the customer who is the only one in the area buying that item just as well as you do the customer who buys the most popular item. I doubt their distribution system can adapt to that model.

    Walmart can try, but in order to beat Amazon at this point, they don't just have to match them, they have to be better. I don't think they even understand what better looks like, let alone have any way of getting there.

    • Yep, agreed. Apparently, Walmart can't stop thinking of themselves as a brick and mortar store. I'm betting that this is why Amazon will continue to win in the online space.

      Fortunately for them, there are apparently plenty of people who still prefer to shop for things in a physical store.

      • Fortunately for them, there are apparently plenty of people who still prefer to shop for things in a physical store.

        Last time I was on vacation we were thrilled to discover a Walmart Neighborhood Market across street from our condo.

        We could buy beer, wine, groceries .. all right across the street. The other Walmart locations had sunscreen, clothes, BBQ stuff, batteries ... and beer, wine, groceries, and everything else you'd expect.

        Walmart has correctly identified that there will always be things people wi

    • by Nidi62 ( 1525137 )

      Yes, Walmart has a huge and efficient distribution system, but can they really leverage that for online sales? When stocking stores, they ship large quantities to each store. For online sales, it's small quantities of a much larger variety. You have to support the customer who is the only one in the area buying that item just as well as you do the customer who buys the most popular item. I doubt their distribution system can adapt to that model.

      Walmart can try, but in order to beat Amazon at this point, they don't just have to match them, they have to be better. I don't think they even understand what better looks like, let alone have any way of getting there.

      The best option would be to piggyback off their massive distribution network and ubiquitous physical presence to facilitate delivery times. Use your existing distribution network to delivery ordered items to the nearest (or most efficiently located based on warehouse and destination locations) retail store and then have an insourced (or at least Walmart branded) delivery driver co-located with the store to make deliveries (this would probably be cheapest if limited to stores with high online order volume)

    • by Greyfox ( 87712 )
      Well lately Amazon's prices have been coming in between 1.5 and 5 times the cost of what it would cost to go get the same product at the store, and that's before shipping. Even if you find something that's going to cost about what it would at a local B&M, by the time they tack on S&H, you're paying $20-$30 more for it. For the same price, Walmart could just locate the closest store to your house and have some dude drive it to you. Even if that dude can only make one such delivery an hour, my average
      • by Nidi62 ( 1525137 )

        Even if that dude can only make one such delivery an hour, my average Amazon shipping cost is about 3 times what that guy makes in an hour. At the very least, a little competition might keep Amazon honest.

        I can't remember the last time I actually paid for shipping on Amazon, since I have Prime (which only costs around $100). Assuming the driver makes minimum wage of $7.25 an hour, you are paying $21.75 every time you make an Amazon order. So, assuming you order something off Amazon at least 4-5 times a year, why aren't you just paying for Prime?

      • Well lately Amazon's prices have been coming in between 1.5 and 5 times the cost of what it would cost to go get the same product at the store,

        Can you provide some real-world examples you've run into while shopping online recently? That sounds a little bollocks-y. I'd believe 1.2 times, 1.5 times, that sort of thing. Usually I get things via eBay because the ultimately best prices are there, but often I see them for almost the same final shipped price on Amazon.

        • Can't vouch for 5 times the cost, but often the same product is significantly cheaper through Walmart, and is delivered quicker.

          http://www.amazon.com/Everlast... [amazon.com]

          http://www.walmart.com/ip/Ever... [walmart.com]

          And most recently, as Amazon is pushing it's subscription service, there are products Amazon refuses to sell unless you join Prime (Prime Pantry items being the most egregious). Only the hubris Jeff Bezos can justify the logic in not selling things.

          Amazon's only grace at this point is near one-stop shopping, but incr

          • Can't vouch for 5 times the cost, but often the same product is significantly cheaper through Walmart, and is delivered quicker.

            I guess we'll never know, I enabled all the scripts I'm going to enable on their site, and I still didn't get a price. I guess that's why I've never bought anything from walmart.com. It's also the same reason why I never bought anything from sears.com.

            You are aware that many times the Walmart version of a product is inferior, right? Small suppliers can't get away with that, but the big ones that are in a better position to dictate terms supply walmart with shitty product under different SKUs that aren't ava

      • Well lately Amazon's prices have been coming in between 1.5 and 5 times the cost of what it would cost to go get the same product at the store, and that's before shipping.

        I've found Amazon pretty price-competitive. Sometimes more for some items, sometimes less. When Amazon is less, some stores (like Target) will price match if you show them the Amazon listing on your phone.

    • Part of the genius of Amazon Prime is that it capitalizes on the sunk cost fallacy [wikipedia.org]. I (happily) give them $100/yr to allow me to shop there with no shipping costs, and, by god, I'm going to get my money's worth. I'm not going to squander my sunk costs by shopping at some brick-and-mortar store! IMO, this is one of the biggest hurdles Walmart has to overcome.

      I think Walmart is right that accessibility and immediacy is sometimes desirable. If I blow a tire on my bike and I want to ride to work tomorrow, I

    • Yes, Walmart has a huge and efficient distribution system, but can they really leverage that for online sales?

      sure. They can make every store a fulfillment center.

      • sure. They can make every store a fulfillment center.

        I think it might be too late for Wal-Mart. They've lost a couple hundred million dollars in market capitalization last year and for them to go all-out as an Amazon killer would require them to close a bunch of stores and turn them into distribution centers.

        It's a completely different model than they have now.

        Plus, Wal-Mart stores are funky. Sure, a lot of people shop there, but nobody likes shopping there.

    • by DRJlaw ( 946416 )

      Yes, Walmart has a huge and efficient distribution system, but can they really leverage that for online sales? When stocking stores, they ship large quantities to each store. For online sales, it's small quantities of a much larger variety. You have to support the customer who is the only one in the area buying that item just as well as you do the customer who buys the most popular item.

      Or you "ship to store" for the customer who is the only one in the area, do not charge them shipping, do no risk theft of

    • by Sloppy ( 14984 )

      Why would I buy something online and then drive to pick it up?

      The only thing I can think of, would be: If I'm driving over there anyway, for my non-online purchases (groceries).

      I have a few grocery stores that I visit fairly often, including one that I visit nearly every week. (None of them happen to be Wal-Mart but for the sake of the arugment, let's pretend one of them is.) I'm never going to buy beer or porkchops or bread online from Amazon, but if I were at my grocer's checkout, and after I ran my "di

    • Plus. If we're going to be told what customers want...
      Customers want to NOT shop at Walmart.
    • Yes - I agree that they are still thinking about it wrong. The reason that I use local pickup is because I want it now - today - like in the next 30 minutes. And that's the only option the store provides.

      Now - if I could get somebody to drive it over to my house and Deliver it, I would. I shop online to see what is available in a lower stress env (plus I'm thinking about the item Now! Not add to Shopping-List, but Add to Cart!). Of course - rarely do I actually need it Now -- rather today - by 5pm.

    • by cdrudge ( 68377 )

      Why would I buy something online and then drive to pick it up?

      To have it NOW, or as soon as now as I can. If I can pay a competitive ecommerce price and have it now, why would I wait 2 days for Amazon Prime to deliver it?

      If I don't need it now, then I can have it shipped just like any other ecommerce site.

    • I can see the future when Amazon buys FedEx or UPS (or an unknown). Sure it is all out-sourced to them - but they have all created huge distribution networks.

      Walmart can become like those Delivery Only Pizza places...or dare I say.. Service Merchandise.

      This is where Walmart can beat Amazon - they already have the local warehouse and future distribution center. Amazon is still building theirs.

      For those who don't recall who/what Service Merchandise was - Catalog shopping. A mashup of online stores of today

    • by maeka ( 518272 )

      Yes, Walmart has a huge and efficient distribution system, but can they really leverage that for online sales? When stocking stores, they ship large quantities to each store. For online sales, it's small quantities of a much larger variety. You have to support the customer who is the only one in the area buying that item just as well as you do the customer who buys the most popular item. I doubt their distribution system can adapt to that model.

      What you're missing with this line of thought is the proper com

  • His surname isn't his fault, but putting Roman numerals after it is.

    If you're not a king or queen, that's a strong indicator you have more ego than brains.

    • Oddly enough, I've known no less than 3 people who were "the third" and put the "III" after their name.

      For legal purposes, and not confusing the shit out of everybody, knowing the difference between "Robert Smith", "Bob Smith Jr.", and "Little Bobby Smith" can be an actual thing.

      By the time you're "the third", the roman numerals are really the only way to do it.

      The real problem is parents who feel the need to make their children "the third", thereby necessitating this in the first place. I generally think

      • The real problem is parents who feel the need to make their children "the third", thereby necessitating this in the first place. I generally think that ego is attributable to the previous generation than the poor schmuck who has to do it.

        My father was a III and he named his first son the IVth. It's a family name, it's not just ego. I'm just glad I didn't get the name. My dad was an asshole. So's my eldest half-brother, who got it. He can have it.

        • It's a family name, it's not just ego

          Look, let's be honest here ... at that point, "family name" means "multiple generations of ego".

          Or, you do what George Foreman did, and name all your kids after yourself. He's got a Jr, an III, an IV, a V, and a VI.

          It's just a lot more ego. ;-)

  • by Joe_Dragon ( 2206452 ) on Friday October 23, 2015 @11:35AM (#50787865)

    Walmart can pay it's workers less then Amazon and pass part of the saving after the ceo's cut.

  • So far my spouses and mine experience with the online pickup section of their stores is that at night the Walmart employees really hope that no one will show up and just abandon that little room of the store. The first thing that needs to happen is to have fast service at the online pickup room %100 of the time.
    • Walmart employees really hope that no one will show up and just abandon that

      I'm sorry, is this different from any of the rest of it?

      My general experience is trying to find someone help you and getting told "oh, I don't work in this department".

      Oh yeah, then who the hell does? You're the only employee anywhere near this department. Oh, I see, your job is to figure out how to block as many fucking aisles as possible so people can't get through.

      • I'm sorry, is this different from any of the rest of it?

        For the rest of the experience, I can get by without an employee. I can't do online pickup, without an employee around.

      • I have two walmarts within a bout 20 minutes of my house one is bright, shiny, new, and exactly what they advertise with smiling employees ready to help, the other is dirty, old, and staffed with part time college and highschool students... Thankfully the nice one is closer.

  • by tompaulco ( 629533 ) on Friday October 23, 2015 @11:44AM (#50787945) Homepage Journal
    It's got to be hard to catch up to somebody who is so far behind you. You'd have to sell all the way to infinity, go back to negative infinity and then catch up to the $12 billion in sales that Amazon does.
    There is a lot of "me, me, me, now, now, now" in American culture. Wal-mart will always have a place as long as people can't stand to wait two days over instant gratification.
  • Like I'm going to do business with a company that is even more obnoxious and evil than Amazon.

  • The thing that seems extremely strange to me about the walmart.com website is the sheer number of ads. And I don't mean ads for products that Walmart sells, I mean they're selling ad space for companies like Avis and Equifax through AdChoices. The result of this, for me at least, is that their site runs incredibly slow.

    I invite people to navigate to the walmart.com site and take a look. What are they trying to do there? Is it that the walmart.com team is expected to be financially self supported? I would

  • Revenue != Profit (Score:4, Insightful)

    by ArhcAngel ( 247594 ) on Friday October 23, 2015 @12:37PM (#50788327)
    Amazon hasn't ever made a significant profit. [ibtimes.com] What point am I trying to make? I have no idea but it's an important one!
    • It doesn't really matter to Walmart whether or not Amazon is making a profit. So long as Amazon is doing business with customers that would otherwise take that business to Walmart, they are losing out. It's a lost sales situation

    • Amazon hasn't ever made a significant profit. What point am I trying to make? I have no idea but it's an important one!

      I don't know what point you were making, but the lesson I'd take from this is that Amazon has been continuously betting on the idea that "cornering the market" is more important than current profits. They don't need to make a profit as long as they keep expanding and looking like they're going to achieve complete market dominance -- because if they do, they have a system in place that no one else does and will be in a place to take in profits for a long time (at least a long time in the internet economy ti

    • Amazon hasn't ever made a significant profit. [ibtimes.com] What point am I trying to make? I have no idea but it's an important one!

      The reason Amazon 'hasn't made a profit is because they've plowed it back into building a 21st century and beyond IT and logistics infrastructure to support their growth. That's fair competition. What bugs me is Amazon's use of software patents to stifle their competitors and I wonder how that will affect Wal-mart. as they try to play catch up. I am sure Amazon has done some unique stuff but a lot of what I've seen is obvious, at least if your looking to solve the problem. One-clcik is just a shining exampl

  • They maybe should set their sites on trying to match Home Depot. They are doing the model that Walmart purports to be going after. The difference being that when I do a buy and pickup at store; it actually gets picked and is waiting for me at Home Depot, but not so at Walmart. The online and in store stock db matches on Home Depot, but not at Walmart.

    I guess it comes down to; Walmart's business plan could work and be successful; however to be able to execute they have to have store managers that are compet
  • by tomhath ( 637240 ) on Friday October 23, 2015 @12:48PM (#50788429)
    Walmart was built on quality, name brand merchandise at low prices. At some point the MBAs took over and decided it was better to direct source merchandise from offshore manufacturers and slap their own label on it; they also beat down the name brand suppliers to shrink packages and cut corners to lower the price. They are now seeing what happens when you chase short term profits and drive off long term customers.
    • If you're not searching for a specific brand name of something, you will often get 87 nearly identical products (often with wildly varying ratings, chock full o'astroturfed reviews) for junk made in China.

      Half the time I search on Amazon I feel like I'm just getting an iframe with the results from Alibaba.

  • Amazon is making moves in e-commerce that's put Walmart so far behind that it might not be able to catch up for 10 more years, if ever."

    In 1999, Amazon was a fledgling company with annual revenue of $1.6 billion; Walmart's was about $138 billion. By last year, Amazon's revenue was about 54 times what it was in 1999, nearly $89 billion, almost all of it from online sales. Walmart's was about three times what it was 15 years before, almost $486 billion, and only a small fraction of that â" 2.5 percent

    • In that time frame Walmart entered the Grocery retain business. Their Revenue is $486B but their margins dropped drastically.
    • "Amazon is is burning cash (have yet to post a profit)"

      Where did you hear that? I'm fairly certain that they've had profitable quarters during their 20 year history.

      https://ycharts.com/companies/... [ycharts.com]

      • hmmm.... and I'm sure they post a *large* profit on certain days if you were able to split hairs that finely. But that chart sure looks like they bounce around 0% with no significant profit over any year. So I guess it boils down to the statement of "never" and how frequently that is assessed. If GP is overstating things it isn't by much.

  • by Stormy Dragon ( 800799 ) on Friday October 23, 2015 @01:04PM (#50788553) Homepage

    Walmart is building vast new fulfillment centers and is rapidly enhancing its delivery capabilities to take advantage of its extensive store network to provide convenient in-store pickup and adds that 70 percent of the American population lives within five miles of a Walmart store.

    I'm not sure having to pick up your delivery in person at a Walmart is quite the benefit Walmart thinks it is. The old joke about Target being the store for people who are willing to pay more to avoid being around Walmart customers exists for a reason.

  • At what point were they even close?

  • Don't forget, Amazon's logistics chain was built by Wal-Mart veterans.

    In fact, Wal-Mart sued Amazon at one point because of that.

    AFAIK, the only logistics person that didn't seem to have a logistics background is Tim Cook...although he was in charge of fulfillment for IBM's PC division at some point. I'm not sure anything in his background would have led anyone to believe that he could create a manufacturing machine like Apple's.

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