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Herb Sorensen, Ph.D.'s RetailWire Blog
October 20, 2009
Braintrust Query: Amazon/Walmart.com - An Interesting Battle to Watch
FROM RETAILWIRE:
A battle between titans began last week. Walmart announced it will be offering ten highly anticipated hardback books on its website for $10. After Amazon responded to match the $10 offer, Walmart.com raised the stakes by lowering their price to $9. Is there a motive behind Walmart's online book promotion beyond just books?
MY COMMENTARY:
The Walmart vs. Amazon initiative is truly a major milestone in what is to be a clash of the titans. But this is a battle that will reverberate far down the line, and will soon engulf Kroger (as Target is stepping in,) and ultimately will permeate all of retailing. I will not repeat here my comments on the first RW topic today--iPhone apps in the stores--but instead want to note the expected impact here on brand suppliers. No one should doubt that the internet (or maybe internet-2?) will embed itself into the lives of the majority of the population, nearly 24/7, over the next few years. The impact on retailing will be stupendous. First of all, we must see that the internet offers a way for a retailer or brand to genuinely engage individual "shoppers" in personal "conversations." The selling that can occur is not the crass shouting and waving of arms, not the paying of customers to buy, through discounts, couponing and other mindless retail strategies, appropriate as they may be on a limited basis. The real potential is the establishment of trusted relationships with shoppers, delivering value with each communication, so that the shopper does NOT find the means to filter your contacts out. When a brand or retailer establishes a relationship such that the shopper doesn't mind seeing their name in the "inbox" on a regular basis, we are now in a position of incredible power, particularly when this is multiplied by the millions--billions. Retailers of course can extend this power for the benefit of their specific stores. But manufacturers can extend this power across their range of brands, ACROSS THE RANGE OF ALL RETAILERS!!! This has huge implications, because brand has the potential to regain their position of primacy in the retail space, without being beholden to their retail channel of distribution of THEIR products. I expect that these facts will lead to a major realignment of the retailer/brand power structure, with retailers on the ascendancy, again. I mention the potential role of the brands here, because they are the third "Titan" that will hold the balance of power. Clearly Amazon is racing into the widest possible channel space, and will add enhanced delivery to leverage their own merger of online-offline retailing. Walmart is racing into the online space, with their formidable immediacy of delivery, AKA Walmart bricks-and-mortar offline stores. In this clash, Amazon is clearly the superior online seller, in the sense of knowing how to use the internet to conduct "personal" sales. Walmart is leveraging their own "Always low prices," strategy (AKA, pay the shopper to buy.) Both of these Titans hold the #1 position in their respective retail spaces, online and offline. As each learns how to be maximally effective in the other's space--merger of online and offline--there is no way to be certain who will win. #1 is always a precarious place. As Disraeli said on ascension to the position of prime minister of England, "I have reached the top of the greasy pole." Sometimes the descent can be spectacular. But smart brands can win with the shoppers--and Walmart, Amazon and Target are not the only retail players. |
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