Study Finds Walmart Beats Amazon on Price

Discussion
Jun 20, 2012

Is Amazon.com being set up to become the showroom for Walmart’s Supercenters?

New research from Kantar Retail that looked at 36 items from four categories — including edible grocery, non-edible grocery, health and beauty care and general merchandise — found that Amazon.com’s market basket basket was 20.5 percent higher than the same items sold in one of Walmart’s stores. The research also looked at Walmart.com and found that the same items sold online were seven percent more than if consumers made a trip to their nearby Supercenter.

One advantage that Amazon may have over Walmart’s brick and click operations is stock. Kantar found that 14 percent of the items on Walmart.com were out-of-stock while three percent were missing from the Supercenter’s shelves. Amazon did not have any holes in its inventory.

Discussion Questions: Does Kantar Retail’s research upset the assumption that online merchants have a pricing advantage over brick and mortar stores? How do you explain Walmart Supercenters having lower prices than both Amazon and Walmart.com?

Join the Discussion!

18 Comments on "Study Finds Walmart Beats Amazon on Price"

Notify of

Sort by:   newest | oldest | most voted
Max Goldberg
BrainTrust

While its results are interesting, Kantar Retail’s research only covered 36 items. A more thorough study would be needed before Walmart could say it’s cheaper than Amazon or vice versa. The only interesting statistic from the study is that both the WM store and online had out-of-stocks, but even that could be a function of the small sample size.

Bill Emerson
Guest
Bill Emerson
5 years 2 days ago

36 items is kind of a small sampling to arrive at a conclusion as large as “Walmart Supercenters have lower prices than Amazon and Walmart.com.” The fact that there were so many out-of-stocks would suggest that these were promotional items.

Paula Rosenblum
BrainTrust

I am so NOT on board the “showrooming express.” Showrooming has always existed in some form or another. While the mobile phone makes it easier to do (and faster), consumers have always price shopped big ticket merchandise.

People like Amazon because it’s “close enough” on price, the assortment is beyond mind-boggling, the products ship like lightning and returns are easy and convenient.

So, am I surprised that Walmart might be cheaper? Not particularly. Does it make me want to shop Walmart over Amazon. Not particularly…partly because I shopped at Walmart.com once and found it far less convenient, partly because I am too much of a snob to shop at a mammoth Walmart store and fight the traffic and people to get in there.

My advice to retailers is to stop thinking about showrooming and getting to the lowest price and start thinking about “close enough” on price and “better than the rest” on service. There is almost NO statistical evidence that consumers are as focused on price as we think they are. Of course, if you pound on the topic long enough, they will indeed get focused on it…then, everyone loses.

Joel Rubinson
BrainTrust

This does not surprise me at all, as it is my personal experience. I commented on this regarding the showrooming discussion. I think retailers can actually turn the tables on Amazon.

Dr. Stephen Needel
BrainTrust

Details would be nice — like where was the study done (Walmart is not nationally priced)? Is there a competitor nearby, like Target, which might lower the price? What were the products? Were any on sale during the test period?

And I’m not sure we’ve always assumed that online prices were lower on consumer packaged goods — we might have assumed lower on durables and big ticket items, not on everyday groceries.

Herb Sorensen
BrainTrust

This is a good reality check, because it is NOT price that gives Amazon its large lead over most of bricks retailing — it is the simple, shopper friendly way they deliver you to the exact item you want to purchase. That process, which CAN be done in the bricks store, without technology, would give bricks retailers the winning hand. They just are clueless about how to play the hand. It’s NOT about the price!

Charles P. Walsh
Guest
Charles P. Walsh
5 years 2 days ago

Traffic and competition. Walmart has 138 million people visiting their stores each week. Walmart has spent (and continues to invest) a good deal of money in maintaining price competitiveness in their brick and mortar stores.

I believe it is fair to say that price competition amongst brick and mortars is much keener than it is for online retailers. Nothing sharpens prices like brick and mortar competition for your dollar in your town.

Robert DiPietro
BrainTrust

Not a lot of detail to debate this. What items, what location, etc? Could be promotional items or zone based pricing.

Either way, not a good example as Walmart is the 800 lb monster.

Ken Lonyai
BrainTrust

A lot more facts are needed before any conclusions can be drawn, but it does shed some light on the potential for competition between on and offline. As stated by others, this was a small sample size and we don’t know how/why these products were chosen for comparison. Additionally, we don’t know if Walmart is engaging in loss-leading to get people into their Supercenters or if they have some anomaly in their pricing mechanism.

Mobile enabled showrooming is a fact, it’s here to stay, it will grow, it will put seemingly healthy chains out of business, yet, there are ways to combat it — in some categories more than others. Whether this report is an example of fighting back or not is yet to be seen. An important factor is logistics which is something I thought Walmart had a pretty good handle on.(???)

Bob Phibbs
BrainTrust

Herb is right on. While price is a factor with Amazon, they are operating on so many cylinders making purchases easy for customers that the thing to measure would be convenience.

Adrian Weidmann
BrainTrust

This study shows that it is a mistake to simply assume that the online retailers have the lowest price. It shows that Amazon can leverage the shopper’s presumption that they will get the lowest price through an online retailer. It is noteworthy that the study found that Amazon had no holes in their inventory while Walmart had a 14% out-of-stock issue. Many comments have been made on these pages stating that inventory is an ‘Achilles heel’ for ‘brick & mortar retailers.

Martin Mehalchin
BrainTrust

Small sample and Walmart’s exceptional status as the world’s largest retailer tells me not to read too much into this one. Smaller chains will still find it difficult to compete on price and convenience against online competitors. I do love Paula’s comment on this: focus on service and experience and you won’t have to race to the bottom on price.

Nikki Baird
BrainTrust

I would be interested to know what is included in “the price” — does that include shipping? Sales tax? How long would it take to get the product via Walmart.com vs. Amazon vs the baseline of the store (immediate, assuming it’s in stock)? I think it confuses the industry to talk about “price” especially between online and store, because if you don’t include the cost/time of actually getting the product, you’re ignoring and completely discounting the value of “right here, right now.”

But I also found it very interesting that Walmart.com was more out-of-stock than the store. Smells like a cross-channel opportunity to me.

Craig Sundstrom
Guest

So it’s cheaper for me to amble down to Walmart and pick up a bag of pork rinds (and the toothpaste I’ll need afterward if I’m health-minded) than it is to order it on Amazon…and then wait 2-5 days for it to be delivered? Gee.

To a person, every respondent here agrees this study is too lacking in detail and sample size to tell us anything; and that’s too bad, because “conventional wisdom” often isn’t.

Ed Rosenbaum
BrainTrust

What kind of scientific survey is 36 items? I do not find this credible.

Carol Spieckerman
BrainTrust

I could not agree more with Paula. Pundits are making everything about price when many mitigating factors come into play (convenience, retailer or product brand preference, category, etc.). Show-rooming schmo-rooming.

gordon arnold
Guest

In this economy, the key to successful pricing and volume business markets is leveraged by the retailer’s ability to purchase, distribute and get rid of the inventory quickly at an acceptable profit. Walmart is a world class distribution company with the power to cost effectively purchase any volume of product at once and locate the merchandise for an aggressively priced, quick sale. Amazon is paying premium shipping and receiving costs. At $4.00 per gallon with no fleet of their own, Amazon is going to feel the pressure of fuel costs for years to come. The program in place to grow a distribution network by a company with little or no experience in this effort will keep them off the heels of Walmart for some time. Amazon’s success in the near future will be against the remaining medium sized businesses and the weakening giants that they share customers with.

Phil Rubin
BrainTrust
5 years 2 days ago

The assumption that online merchants have a pricing advantage (or have to have such) is a vestige of those not understanding multi- or omni-channel retail, especially in the 21st century.

Walmart is always going to have a pricing advantage as that is their reason for existence and core value proposition. That is not the same for Amazon, nor should it be, as Paula Rosenblum aptly describes.

Speaking of Paula, I concur with her comments on showroooming as if you provide enough value, it more than makes up for pricing disadvantages. Retailers either complaining about or blaming showrooming for its impact on their business need to identify and pursue other more valuable ways to engage and retain customers than discounts.

wpDiscuz

Take Our Instant Poll

How much of a pricing advantage/disadvantage do e-commerce sites have compared to brick and mortar stores at the current time?

View Results

Loading ... Loading ...