Is Walmart.com the Next Amazon Online?

Discussion
Sep 01, 2009
George Anderson

By George Anderson

It used to be
wondered aloud if Amazon.com would someday become the Wal-Mart of the internet.
While it has become very successful, it’s hard to argue that Amazon has
achieved the same level of dominance in e-tailing as Wal-Mart has in the
world of brick and mortar stores. To further complicate matters, it now
appears that walmart.com wants very much to be the Wal-Mart of the internet
and has launched a new service that encroaches on territory that Amazon
has occupied until now.

Walmart Marketplace
offers items from other sellers for purchase through walmart.com. The items
sold through the site, a la Amazon, are shipped by partner merchants who
also handle returns. It allows walmart.com to expand its offerings and
generate revenue without significantly adding to its cost structure.

“We’ve added nearly one million
new items to our online assortment with the introduction of Walmart Marketplace,
making it even easier for customers to find more of what they want when
shopping Walmart.com,” Kerry Cooper, Walmart.com’s chief marketing officer,
said in a press release. “Working with select retailers, known for their
strong customer service and large online assortments of new merchandise,
gives our customer more reasons to choose Walmart.com when shopping online.”

CSN Stores, eBags
and Pro Team are retailers starting out day one with Marketplace. CSN (www.csnstores.com)
offers products in the baby, home, shoes, sporting goods and toy categories;
eBags sells handbags and luggage; and Pro Team is in the licensed sports
apparel and collectibles business.

While Amazon
and eBay are notable for expanding product offerings through partner merchants,
they are not alone. Sears.com, for example, sells auto parts from the Whitney
Auto Group through its site. Overstock and Buy.com also offer third-party
services.

Retail consultant
Burt Flickinger told The Associated Press, “Wal-Mart
is fully focused on winning against every key competitor on land and online.”

Discussion
Questions: What will Walmart Marketplace do for Walmart.com? What will
it mean for its competitors online and those operating stores?

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22 Comments on "Is Walmart.com the Next Amazon Online?"


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Carol Spieckerman
Guest
11 years 8 months ago

I find Walmart’s Marketplace move fascinating, mainly because of the differences between Marketplace and Amazon. Unlike Amazon, Walmart is introducing products that compete in the same categories and with the same products that it sells both online and in its stores. Clicking through Marketplace, it is difficult to determine which products and brands are from outside retailers and which are already in Walmart’s stable (and Walmart’s own products don’t appear to be given top billing). Like Amazon, you aren’t directed to the seller’s website so the shopping and checkout process is seamless. All of this combines to make Walmart’s brand more relevant and I’ll add that it increases the perceived value of Walmart’s gift cards with every new retailer added, and just in time for Holiday ’09. Brilliant!

David Biernbaum
Guest
11 years 8 months ago

Absolutely, Walmart can become the next Amazon.com and much more so! Walmart already enjoys a very solid image of being the consistent EDLP leader, and yet there are still shoppers that prefer not to go to Walmart because of the store size, the crowds, and to a lesser degree even the social stigma. However, Walmart will have no consumer barriers online. Success depends completely on execution. However, I will never place my bet against Walmart. They can do whatever they set their sites [sic] on to do well.

Roger Saunders
Guest
11 years 8 months ago

There’s no guarantee that shear size leads to the biggest in another field. That applies to retail, as it does to any other organization.

Walmart.com has a solid strategy, but it will still come down to execution of finding and delivering the merchandise that consumers are seeking.

Will consumers likely increase their shopping patterns online? Is the Thames moist?

Walmart has set the table to move forward in a growing area of the retail world. And, Walmart has the capability to play the game on a worldwide stage. The opportunity is there for them. They’ll have to be nimble and remain focused on the consumer–both are practices that they have adhered to in the past. Don’t bet against them. But, don’t see it as a laydown success, either.

Al McClain
Guest
Al McClain
11 years 8 months ago

Seems to me that we now have two number ones in online retailing–Amazon and Wal-Mart. Amazon is in reality, but has to be looking over their shoulder constantly–kind of like any pro golfer with a two stroke lead on the back nine looking at Tiger Woods in the rear-view mirror.

It will be interesting to see just how the price war part of this plays out. For the moment, Amazon has one significant advantage in that Wal-Mart is only offering free “ship-to-store” instead of truly free shipping that Amazon offers.

Should be a war of the titans for the next several years.

Joan Treistman
Guest
11 years 8 months ago

I agree with Carol’s overview. Walmart is casting a wider net for its own shoppers and prospects.

And I believe it’s the prospects that are the revenue opportunity that will be eye opening. Once the word gets out (and it takes no time at all) shoppers who might not visit a Walmart on land, will wander in through the internet. The strategy for products, brands and prices will create the purchase, repeat visits and repeat purchase that Walmart is looking for.

From that point, Walmart will have nourished its brand equity and expanded their scope most effectively and efficiently. OMG, Walmart is amazing.

Sandy Miller
Guest
Sandy Miller
11 years 8 months ago

Walmart will be successful simply because of its value, increasingly wide selection and credibility. The added benefit for Walmart is building shopper frequency of store visits. That is, they offer all that Amazon provides and added convenience.

Richard J. George, Ph.D.
Guest
11 years 8 months ago

Walmart’s initiative in this area demonstrates that competitors don’t always look exactly like you. Despite its own success, Walmart recognizes the success of Amazon and is willing to adapt and adopt aspects of the Amazon model to further Walmart’s market penetration. Amazon’s mission has always been to allow consumers to “find, discover and buy anything that they want online.” It appears that Walmart, within its target markets, intends to allow consumer to find, discover and buy anything they want period–regardless of distribution channel.

Walmart, like Amazon, intends to be the preferred retail channel in terms of both information and distribution. Its addition of expanded “clicks” to its “bricks and mortar” domination is not something Amazon can easily respond to in-kind. Score one for the folks from Bentonville.

Anne Bieler
Guest
Anne Bieler
11 years 8 months ago

No doubt a very strong move for Walmart! The first step of ship-to-store has paid off for several food retailers, creating more convenience for shoppers and loyalty for the retailer.

Expanding the selection to the new and interesting we hear about is a great jump ahead–gives confidence to a segment of etail shoppers that they are dealing with a trusted source. Well executed, this could be solid growth potential for the folks in Bentonville.

Ron Margulis
Guest
11 years 8 months ago

What Walmart needs to do to out-maneuver Amazon, and I don’t see a hint of it yet, is to create a real shopping community. The two sites will sit in the bookmark folders of most browsers, but will one or the other or both sit in the favorites or toolbar folder? Right now it’s just Amazon. To get shoppers to add Walmart to their favorites or toolbar folder, the retailer will have to do more than just offer products from competing vendors and markets. They will have to make it easier for consumers to shop the site.

Herb Sorensen
Guest
11 years 8 months ago
“Wal-Mart is fully focused on winning against every key competitor on land and online.” This is a good sentiment, and positions Walmart well for the coming merger of online and offline retailing. We have been referring to the “Amazonification of stores” for some time. This has two manifestations: First is for current bricks-and-mortar retailers to begin thinking like salesmen, instead of merchants, using the tools of the traditional store. Second is for the full deployment of the internet inside the store. There is a long history, dating back to Videocart, but most recently manifest by MediaCart (full “laptop” on the cart) and Modiv Shopper (proprietary handheld shopping assistant provided by the store.) But these cutting edge developments may get swamped in the tidal wave of the shoppers’ own “internet in the store,”–cell phones, PDAs and the like. So recently as a few weeks ago I was speculating on the potential for a merger of Amazon and Walmart. Doesn’t look like that is happening. But don’t count out something like Tesco/Kroger/Amazon. Not predicting, just thinking. 🙂… Read more »
Marge Laney
Guest
11 years 8 months ago

This is a natural for Walmart. They have the infrastructure to pull this off seamlessly, and between theirs and the other Marketplace retailers’ capacity, fulfillment should not be an issue. I think the opportunity for Walmart is to create a branded shopping experience for the discount shopper.

Eliott Olson
Guest
Eliott Olson
11 years 8 months ago

I would suspect that if a company has a hot product they should expect to see it in Wal-Mart sooner rather than later.

While traditional category management might require a market share analysis, the retailer of the future might be better served by hiding sales as products are ascending the novelty curve.

Dave Wendland
Guest
11 years 8 months ago

It reminds me of Paul Revere’s ride–“One if by land two if by sea.” This is an all-out effort by Walmart to reach consumers. Smart? You betcha!

Bill Bittner
Guest
Bill Bittner
11 years 8 months ago

The comparison of Amazon and Walmart boils down to a simple question: “Is it an advantage or burden to have a physical retail presence in an online world?”

It costs a lot to operate stores and distribute products to the shelves. Amazon does not have that cost. Walmart has the distribution model fully implemented but up till now did not have as large an Internet presence. The interesting aspect of the expanded Walmart online presence is that it obviates the one huge advantage of the physical network. People choosing products from a different online retailer cannot necessarily run out to the physical store (if the retailer even has one) to satisfy their buying impulse. If people lose their need for immediate satisfaction and become more accepting of the two-day delivery lag, it will only be the “cold chain” that preserves the need for stores.

James Tenser
Guest
11 years 8 months ago
I must say I laughed out loud when I saw this story yesterday. Not out of ridicule, but because it brought me back a decade to a giddy moment in the dot-com era. On May 17, 1999, the Wall Street Journal ran as its lead story on the marketing section, “In the Internet’s Retail Race, Wal-Mart Is an Also-Ran.” Walmart.com was then already three years old, and the reporter’s premise was that Amazon was poised to become “the Wal-Mart of the Internet,” eclipsing the slower-moving chain from Bentonville. Even Kmart.com was cited in the story as a speedier competitor in the dot-com retail race. No kidding. I was interviewed for the story among many other smarter people, and so my comment ran last: “Still, Mr. Tenser says, ‘Amazon will never be the Wal-Mart of the Internet.’ In time, he says, ‘I’m quite certain Wal-Mart will be the Wal-Mart of the Internet.'” See why I’m laughing today? I suppose today I can claim to be kind of a retail Nostradamus. Or at least a lucky guesser.… Read more »
Gene Detroyer
Guest
11 years 8 months ago

Retailers of the world, listen! Online retailing will continue to grow and at some time in the future will overtake brick and mortar retailing.

This is more than a positive move for Wal-Mart. It is a telling measure of how soundly strategic this company is and how they define themselves. Unlike each of the leading retailers of the last century that are now irrelevant or non-existent, Wal-Mart will see the future and lead it.

Don Delzell
Guest
Don Delzell
11 years 8 months ago
There is a new trend in ecommerce site strategy toward the “portal” approach. A significant amount of financial and economic sense applies to this, and as noted, walmart.com is not the first large site to follow this course. Essentially, the strategy revolves around the successful accumulation of vast numbers of monthly unique visitors to the site, and the lamentable fact of mid single digit conversion rates on those visitors. Buried beneath this are the millions of dollars spent on attracting those visitors and fine tuning the mechanics of the site to create an acceptable experience once there. Walmart.com cannot be criticized for this move as it is only one of many initiatives toward maximizing the value of the website. Were it the focus of the company, a question could arise as to the differences in strategic implementation of a “portal” as opposed to a dedicated retail channel. In the physical world, for decade on decade, retailers with sizeable foot traffic have periodically attempted to increase the return from all that traffic by offering broadened assortments…often… Read more »
Janet Dorenkott
Guest
Janet Dorenkott
11 years 8 months ago

I agree with David. I wouldn’t bet against Wal-Mart either. They will apply their cost cutting measures online like they do in the stores. It’s a different venue, but Wal-Mart is not new to online sales.

One thing people fail to acknowledge is Wal-Mart’s successful technology implementations. Over the years, they have lead the way. They were the first retailer to properly develop and implement a data warehouse. This lead to internal knowledge and also to their ability to provide fast access to accurate information back to vendors (via Retail Link). They are still staying ahead of the curve and continue to lead the way in technology and innovation.

The retail industry has always lagged behind the finance and insurance industries, but Wal-Mart has always been an early adopter. Properly implemented, technology can lead to improved internal efficiencies, which ultimately lead to lower costs for the retailer and lower costs to consumers.

I am sure Amazon is concerned about having Wal-Mart as a competitor.

M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
11 years 8 months ago

I recently experienced Walmart’s site-to-store free shipping service and was very impressed. That’s something Amazon can’t do, especially on smaller items like I ordered (Amazon offers free shipping on some larger purchases). I tried to make a large purchase of several small items on Amazon.com last week, but by the time the shipping costs were calculated from all the several suppliers, the cost had doubled. No sale.

Additionally, Amazon.com does not treat their partner suppliers well. I sell through Amazon.com, and they take 35% off the top. Then, I don’t receive a handling charge and have to endure Amazon’s calculation of shipping costs. I use only FedEx signature service, so Amazon’s calculation is always lower than mine. After all that, I’m selling through Amazon at half-price.

Bottom line, Walmart Marketplace can walk through some rather large gaps in Amazon’s customer and vendor services.

Mike Spindler
Guest
Mike Spindler
11 years 8 months ago
Always risky commenting after so many insightful notations. Walmart gets four important things out of this move:1. a place to watch consumers react to many items online, without the need to inventory those items in store. If they determine a mini-trend across the board or in an area – BAM -into the store it goes…perhaps under a different label.2. in their new merchandising move they are culling items left and right. This move gives them an opportunity to give vendors a chance to succeed with items that haven’t been able to make the grade in the new assortment profile. If an item picks up steam…see number 1.3. this move also broadens Walmart’s advertising reach, and clout. “If you didn’t want to advertising with us on our in-store network, perhaps our online channel??”4. finally, and perhaps most importantly…this gives Walmart access both to the consumer and to information about EACH consumer. This is something they have not had, but Amazon has. In the online world it is much more common for marketers to look at each… Read more »
Kim Barrington
Guest
Kim Barrington
11 years 8 months ago
Whatever Wal-Mart is doing with this move, it will only be a me too before all is said and done. More than Wal-Mart will be creating this type of platform and then we will have silly retailers doing the same thing online that they did on land, crowding the space with the same goods…why not be creative and do something new for a change? This is why people aren’t buying, because they don’t see real innovation. It’s like Wal-Mart has just made a lateral move. Nothing very exciting, and highly overrated. They can shake, rattle and roll all they want but at the end of the day it’s the customer who will decide where to go and what to buy. The real movers and shakers that can actually take Wal-Mart up a notch or two have found others who they prefer shopping with. The silver lining of this recession is that shoppers get to decide who they don’t want to do business with because shopping with them as a necessity turned out to be such… Read more »
Rick Boretsky
Guest
Rick Boretsky
11 years 8 months ago

Let’s not get too far ahead of ourselves. While this is a good move for Walmart, and their online business is sure too grow, they have a long way to go to even be mentioned in the same category as Amazon. Walmart online does a fraction (less than 10%) of what Amazon does. It’s like comparing Bing to Google. Sure, Bing offers some really interesting and cool stuff that Google does not have (yet), but are they going to overtake Google? They are making small, almost unnoticeable, dents in Google’s armor. I think the same will be true for Walmart, in comparing it to Amazon.

That being said, I think for Walmart’s own online strategy, this is a good move, they will increase their online business, by offering even more value, convenience and value to their customers, and that is always a good thing.

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