Here’s How Walmart Is Gaining on Amazon in Ecommerce
For what seems like forever Amazon has been the undisputed king of the ecommerce space. From a tiny dotcom startup which saw Jeff Bezos selling books from his garage to the globe-spanning retail monolith which we all know and love [or begrudgingly accept] today, Amazon rise has been meteoric.
If anyone had said just ten years ago that a retailer which has historically been so heavily focused on physical retail such as Walmart could be competing with Amazon in the ecommerce arena, this author would probably have asked what they had been drinking.
However, after the company has spent years investing in its ecommerce offerings, Walmart is not only keeping pace with Amazon, but actually starting to catch up.
Walmart
Now, before we get too excited, Walmart is still lagging behind Amazon in ecommerce revenue to the tune of around four billion USD. However, what is noteworthy is that Walmart’s ecommerce revenue is growing far more rapidly at over five times the speed of Amazon.
This means, if this pattern continues, Walmart’s ecommerce sales will overtake those of Amazon in just four years!
What is it about Walmart then which is seeing the retail giant make such impressive gains in the ecommerce space? What can Walmart offer that Jeff Bezos’ ecommerce juggernaut cannot?
According to the same research which discovered the gains Walmart is making on Amazon, the main reasons cited for choosing Walmart over Amazon are price, followed by familiarity with products and proximity to physical Walmart locations. 31% of customers cited the ability to leverage their local Walmart store for click and collect type services as the number one reason for choosing it over Amazon.
Walmart has more than 5,000 physical locations in the US, compared to just 600 for Amazon – 80% of which are Whole Foods stores – which allows for a decentralized inventory storage model meaning products can be shipped easily from a location near to the customer. Customers also like being able to go to a store and speak face-to-face with a customer service associate to resolve any issues, preferring this option to calling a contact center or using a chatbot.
"Walmart’s strength in physical stores is a big opportunity to attract Amazon consumers," reports Forbes. "Most of the consumers who shop on Amazon and don’t shop on Walmart.com (57%) shop in Walmart stores. A big push by Walmart in its stores to attract consumers to its online business could accelerate Walmart’s e-commerce at Amazon’s expense."
One-stop Shopping
Another advantage Walmart has over Amazon is its position as a supermarket where people can buy daily essentials regularly alongside other luxury items. While Amazon does sell groceries through its ecommerce platform, people tend to use it for one-off specialist ingredients they are unable to acquire locally. A general rule is that people still like to use a local supermarket for their daily/weekly/monthly groceries.
This establishes Walmart as a one-stop shop where customers can pick up everything they need in a single visit. During the COVID-19 crisis, people got used to being restricted on where they could go to shop, and this attitude has carried over into post-pandemic shopping behavior. With click and collect and curbside pickup available from Walmart alongside home delivery options in a way Amazon simply cannot match with its limited physical footprint, customers are favoring the former for a single stop ecommerce experience.
The cost-of-living crisis is also now starting to really bite, and people are looking for increasing value from the brands they choose to shop with. In a study by eMarketer 66% of the customers surveyed said "best value for money" keeps them returning to a brand, taking the top spot in terms of customer preferences. "Lowest prices" came in second and "fast shipping" came in eighth place.
Walmart capitalizes on this desire for value and having a value-based merchandising strategy is a big part of Walmart’s ecommerce success when compared to Amazon. Amazon is no longer viewed as a discount retailer with many of its products at or even over RRP. This provides fertile ground for other retailers to swoop in with a superior value-based proposition and steal custom from Amazon.
Final Thoughts
As one of the world’s largest retailers, Walmart is uniquely positioned to give Amazon a run for its money. Coming somewhat late to the ecommerce game has given Walmart plenty of distance to make up, but we are now seeing the retail giant gaining ground on Amazon.
It will be interesting to see whether Walmart can maintain these gains and what Amazon will do in response.
Walmart versus Amazon is set to be part of the conversation at eTail Canada 2022, taking place in September, at the Hyatt Regency Toronto, ON.
Download the agenda today for more information and insights.