Battle Of The Titans: Traditional Giant vs Online Kings

by | Posted on Dec 13, 2017

Introducing The Players

It’s been called “the biggest retail battle of our times”, and is being followed closely by consumers and the market alike. Amazon, leading in e-commerce by a long way, is aggressively expanding into physical, brick & mortar sites; and Walmart, for so long the low price kings of the physical store environment, is moving aggressively into the online space. The clash royale is inevitable – in fact, it’s already begun.

Battle Strategies

It’s estimated that Walmart garners 96.4% of its sales from its physical stores, and a measly 3.6% from online orders. Amazon is almost the exact opposite, with a 95% to 5% ratio in favor of its online business.

Both have made significant strategic acquisitions in their “non-core” areas: Amazon with Whole Foods, and Walmart with Bonobos, ModCloth, Moosejaw, ShoeBuy.com and Jet.com.

What’s clear is that both of these giants are pursuing an omni-channel strategy in order to gain the lion’s share of the multi-trillion dollar US retail market, leveraging both physical stores and online assets.

In terms of other recent moves, Walmart has doubled the number of online grocery pickup locations it offers year-on-year, has begun e-commerce collaborations with higher-end brands like Lord & Taylor, is providing automated Pickup towers to 500 locations, and has tripled the number of products/SKU’s offered.

Leveraging Advantages

Both Amazon and Walmart lay claim to being the lowest priced on the market. Amazon especially, ever since they only offered books (does anyone actually remember those days?), has been vocal about passing fixed cost savings, such as store rentals, on to consumers. Two things you might not have known, however; first, that Walmart has significantly narrowed the price gap between the two retailers. Second, is that Amazon isn’t as well priced as you may think.

According to a study by Market Track, which analyzed the prices of hundreds of products, Walmart has narrowed the price gap from trailing by 3%, to being just 0.3% higher on average; and is even less expensive in some categories, such as wearables and some outdoor and beauty product categories.

This being said, Amazon still beats Walmart – and anyone else for that matter – on price. They are also leveraging their new physical locations (especially in urban and suburban areas) when it comes to convenience, and especially the billion dollar food and subscription box business.  

The Fight Is On

With traditional retailers struggling, and some high profile bankruptcy and debt restructuring deals making the headlines, the focus has really shifted to online sales. Amazon is trying to ensure its advantage – relying on economies of scale, price advantages, and now the physical locations to boot, to lock in their competitive advantage when it comes to online sales, and dent their rivals’ plans when it comes to brick & mortar stores. Walmart, conversely, can smell that Amazon has taken note of their online presence, and is the closest thing to a competitor that they have.

Walmart’s potential for e-commerce growth is massive, and they have the physical locations and know-how to leverage both on- and offline assets to generate big numbers. They aren’t scared of making acquisitions to compete better, and have shown that they will try new things (such as the Lord & Taylor acquisition) in order to get people thinking differently about what Walmart can be.

In Conclusion

2018 is going to be huge; and online sales is where it’s at. For more in-depth and actionable insights, check out the Market Beyond platform, and leverage our advanced analytics to get real-time, actionable intelligence on brands, categories, and millions of products. We’ll be updating with specifics on the Amazon-Walmart battle, including tools and tips that you can use to boost your business.

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