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Amazon, Walmart, and the Epic Battle for Consumer Spending


Two giants are locked in a battle over spending and consumer loyalty. For more than two decades, Walmart dominated brick-and-mortar retail while Amazon ruled online. Now they are on a collision course as each makes inroads into the other’s territory.

The following are comparisons of their operations and strategies.

Omnichannel sales

Both companies have embraced omnichannel selling. Walmart shoppers can shop online and have the goods delivered, like Amazon. Walmart customers can also pick up an online order, including groceries, at a store or curbside. Despite its late arrival in e-commerce, Walmart has made rapid progress, first through the acquisition of Jet.com and then by strengthening its internal operations.

Fast delivery is an essential part of e-commerce. Amazon’s fast delivery has been a competitive advantage. However, Walmart has added new delivery options, including in-store pickup if needed immediately.

Amazon’s first foray into brick-and-mortar began with bookstores and then small-format cashierless grocery stores (Amazon Go). It then acquired Whole Foods Market.

Amazon Go is a cashier-less grocery store and convenience store, like this example in Seattle.

Physical stores

In 2021, Walmart had 11,443 stores worldwide, a decrease from the 11,501 it had in 2020, according to Statista. In the United States, there are 5,342 Walmart stores and 600 Sam’s Clubs. Ninety percent of Americans live within 10 miles of a Walmart store.

Amazon thinks it needs to compete with Walmart on the brick-and-mortar front beyond groceries. According to an August 2021 Wall Street Journal article, Amazon intends to open physical retail stores in the United States of approximately 30,000 square feet. This size is less than one-third the size of conventional Walmart stores and one-sixth the size of Walmart Supercenter outlets.

The first Amazon stores are planned for Ohio and California and are expected to feature the company’s private label products – clothing, furniture and consumer electronics. In early 2020, Amazon opened its first Amazon Go in Seattle. In March 2021, it opened its first physical store outside of North America, an Amazon Fresh grocery store in London. Since then, he has opened five more outlets in England.

Currently, Amazon’s physical stores in the United States include 503 Whole Foods Markets, 12 Amazon Fresh grocery stores, two Amazon Go Grocery stores, 22 Amazon Go convenience stores, 24 Amazon Books stores, and 30 Amazon 4-star outlets, which sell 4-star rated products. and above online as well as trending items and best sellers online.

While Amazon will likely never compete with Walmart in the brick-and-mortar business, physical stores can accommodate customers who want to pick up or return online orders in person.

Delivery

Walmart is strengthening its delivery service to better compete with Amazon. Earlier this month, Walmart announced plans to hire more than 3,000 U.S. delivery drivers and build a fleet of all-electric delivery vans to support its InHome grocery delivery service, which allows drivers to to access customers’ homes via a smart lock and place groceries purchased online in refrigerators. .

First launched in fall 2019, the service is now available to 6 million homes across the United States. Walmart announces plans to expand InHome delivery to 30 million U.S. homes by the end of 2022. The InHome service costs $19.95 per month. Walmart announced a partnership with electric vehicle and service provider BrightDrop, a subsidiary of General Motors, for 5,000 pickup trucks. This will rival Amazon’s Delivery Service Partner Program, which uses a third-party network for last-mile deliveries.

Amazon, Walmart, and the Epic Battle for Consumer Spending

Walmart will purchase 5,000 electric vans from BrightDrop.

Walmart’s regular express delivery allows customers who shop online to reserve a two-hour home delivery slot for groceries, pet supplies and select electronics.

Members of the Walmart+ loyalty program get free shipping. For other customers, an order of $35 is required.

Available in more than 600 cities, Walmart’s Spark Driver is a program where customers place an order online and independent third-party contractors handle purchases and delivery.

In August 2021, Walmart created a new line of business – Walmart GoLocal – a white label last mile delivery service for businesses with large products or complex requirements. Home Depot is a customer.

Employees

Walmart has 2.3 million employees worldwide, with more than 1.6 million in the United States, including those at Sam’s Club. Walmart is the largest private sector employer in the United States.

For many years, Walmart employed mostly part-time hourly workers who received no benefits and earned only a few dollars above the federal minimum wage. Walmart is now moving 67% (two-thirds) of its hourly jobs to physical stores in the U.S. full-time. While this figure is up from 53% five years ago, it is still below the 71% average for the US retail and wholesale industry.

Amazon has nearly 1.5 million employees worldwide, including an additional 170,000 in the first nine months of 2021. The company is experiencing significant churn. In 2019, Amazon hired more than 770,000 hourly workers. John Phillips, Amazon’s former global head of workforce hiring, wrote on LinkedIn that 620,000 people quit or were fired.

Wages

Walmart has long lagged physical rivals in wages and benefits. The Covid pandemic has caused massive resignations of workers, putting pressure on all retailers to raise wages.

In September 2021, Walmart increased its starting minimum wage to $12 an hour from $11 and raised wages for all American workers by $1 an hour. It was the third wage increase in 2021. The average wage for hourly workers at Walmart is now $16.40. In contrast, Costco increased its starting hourly rate from $15 in 2019 to $16 in 2020 and $17 in October 2021. Costco’s average wage for hourly workers is $24 per hour. Target’s starting minimum wage is $15 an hour.

Amazon’s entry-level hourly rate is $16, but in September 2021 it raised the rate for warehouse workers to $18 an hour or more, depending on location. Amazon offers a generous benefits package.

Finance

According to Statista, Amazon’s estimated e-commerce revenue in 2021 was $367 billion compared to Walmart’s $75 billion, compared to $40 billion in 2020.

According to data and software provider FactSet, Amazon’s e-commerce sales (including those from third-party marketplace sellers) exceeded Walmart’s total sales (online and brick-and-mortar) in the twelve months ending March 30. June 2021. During this period, Amazon raked in $610 billion from consumers. By comparison, Walmart took in $566 billion, marking the first time it has been overtaken since 1990, after which it dethroned Sears as the biggest US retailer.

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