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Amazon Vs Walmart: Who’s Winning the Battle for Your Buck?

Posted on by prathod

Curious about the evolving retail landscape and the roles played by industry giants like Amazon and Walmart? In Nirmalya Kumar‘s Clash, find out how these titans impact the lives of everyday consumers, giving a new meaning to digital convenience and challenging the traditional shopping experience. ​

Read this excerpt as the world’s two largest companies, redefine retail and business best practices, and fight the ultimate battle for your buck!

CLASH
CLASH: Amazon vs Walmart || Nirmalya Kumar

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In the charming suburban town of Harmonyville lived a woman named Elimijn, a dedicated and caring housewife. Her days were filled with taking care of her family, managing the household and pursuing her creative hobbies. Two giants, Amazon and Walmart, played unexpected and integral roles in her life’s journey.

 

Elimijn was an avid reader and an aspiring artist. She loved exploring different genres of books and finding new sources of inspiration for her art. Amazon became her digital haven, offering an extensive collection of books, art supplies and crafting tools. With a few clicks, Elimijn could order the latest bestseller, a set of watercolour paints or even a specialized easel, all delivered right to her doorstep.

 

But Elimijn’s affection for retail didn’t end online. Walmart, with its sprawling store just a short drive away, provided a unique sensory experience. Elimijn enjoyed the tactile pleasure of wandering through its aisles, exploring a vast variety of products. She would often visit with a list in hand, making her way through the neatly organized shelves, hand-picking fresh groceries, household essentials and even some affordable fashion finds.

 

What set Amazon and Walmart apart in Elimijn’s heart was their balance in her life. Amazon’s convenience saved her time and effort, allowing her to spend more precious moments with her family and immerse herself in her hobbies. On the other hand, Walmart’s physical presence gave her a chance to step out, breathe in the air and indulge in a bit of old-fashioned retail therapy.

 

During holidays, Amazon’s quick shipping helped Elimijn avoid the holiday rush. She could order thoughtful gifts for her loved ones, wrapping them up with care and sharing the joy of giving. But the annual tradition of visiting Walmart to select the perfect Christmas tree with her family remained unchanged. The smell of pine needles, the twinkling lights and the festive atmosphere created cherished memories that couldn’t be replicated online.

 

Elimijn’s relationship with these retail giants wasn’t just about transactions. It was about the roles they played in her life’s narrative. Amazon’s efficiency became a trusted ally in her daily routine, while Walmart’s physical presence provided a sense of connection to her community. In a surprising twist, Elimijn’s creative endeavours gained recognition online. Her artwork found a following on social media, and soon enough, she was approached by both Amazon and Walmart to collaborate on exclusive lines of products. Amazon showcased her art supplies and books, while Walmart featured her artwork on select merchandise. Elimijn found herself at the crossroads of the very stores she had come to love. Her story was a reminder that these giants weren’t just about commerce—they were about opportunities, experiences and connections. Through Elimijn’s journey, Amazon and Walmart became not just retailers, but integral parts of her life, shaping her routines, her passions and even her dreams.

 

The battle between Amazon and Walmart, or more generally between online retail and physical stores, is often presented as a zero-sum game. It is believed that as online retailing becomes more popular, consumers will increasingly abandon brick-and mortar stores. Clearly, there is some evidence supporting  this as many traditional retail chains have gone bankrupt while online retailers like Amazon and Alibaba continue to deliver dramatic growth numbers. This difference in growth is also reflected, as noted earlier, in the hefty valuation that the markets place on disruptive e-commerce players relative to incumbent physical retailers.

 

In this chapter, we will build a more nuanced picture of this competition. Specifically, we will investigate if there are certain types of customers, particular buying situations and some product categories where the relative attractiveness of physical stores like Walmart is superior to online stores like Amazon  and vice versa. In exploring this, we will restrict our focus to the US, as it is the country where online retailing began and is most evolved, while also being the largest source of revenue for both Amazon and Walmart. Furthermore, we will use my Marketing as Strategy book’s 3Vs framework of valued customer (who to serve?), value proposition (what to offer?) and value network (how to deliver?) to investigate the differences between these two retail giants. The valued customer and value proposition aspects are discussed in this chapter, while the value network will be the focus of the next two chapters.

 

Who is the target segment for each retailer? Market segments, as we are taught, should be mutually exclusive and collectively exhaustive. Therefore, instinctively, marketers seek to answer this question by demonstrating that the types of people, based on demographic variables such as age, sex, education, income and geographical location, who prefer Amazon are different from those who patronize Walmart for their shopping needs.

 

However, customers in the real world, as the data will show, do not fall neatly into well-defined boxes. When asked, people often respond that relative to Walmart, Amazon shoppers are younger, more urban and educated, with higher income levels. They also see Amazon shoppers as more technologically savvy, forgetting that ordering on the mobile phone app is not a novelty or challenging any more. While the data does feed this stereotype to some extent, the differences in these demographic variables between Amazon and Walmart shoppers are not that dramatic, and furthermore, are decreasing over time.

 

Research indicates that the average (mean level) income of Amazon shoppers at $84,449 is only 11 per cent higher than for those who shop at Walmart ($76,313).2 Digging deeper, the typical (modal level) Walmart shopper is a married white woman with an undergraduate degree, between fifty-five and sixty-four years old, living in the suburbs of south-eastern USA, earning about $80,000 annually.3 However, this segment also frequents Amazon because Amazon’s typical shopper is a college-educated married woman, living in the south-east, earning more than $80,000 a year, but split across two age brackets: thirty-five to forty-four and fifty-five to sixty-four. Thus, a segmentation based on demographic variables does not give an accurate picture, as consumers do not shop exclusively at either Amazon or Walmart, which I am sure also reflects the behaviour of any American reader of this book.

 

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Get your copy of CLASH: Amazon vs Walmart by Nirmalya Kumar wherever books are sold.

How the tech titans plan to stay on top forever

Posted on by swara

Acclaimed tech reporter, Alex Kantrowitz, gives a fascinating insight into the inner workings of the Tech Titans —Amazon, Google and Facebook, playing with the Amazon mantra of ‘Day One’— code for inventing like a startup, with little regard for legacy and prioritizing reinvention over tradition and collaboration over ownership.

Through 130 interviews with insiders, from Mark Zuckerberg to hourly workers, Always Day One shows the way forward for everyone who wants to compete with–and beat–the titans!

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“Day One” is everywhere at Amazon. It’s the name of a key building, it’s the title of the company’s blog, and it’s a recurring theme in Bezos’s annual letter to shareholders. And though it’s tempting to read it as an order to work ceaselessly, particularly at the notoriously hard- charging Amazon, its meaning runs deeper.

Always Day One || Alex Kantrowitz

“Day One” at Amazon is code for inventing like a startup, with little regard for legacy. It’s an acknowledgment that competitors today can create new products at record speeds— thanks to advances in artificial intelligence and cloud computing especially— so you might as well build for the future, even at the present’s expense. It’s a departure from how corporate giants like GM and Exxon once ruled our economy: by developing core advantages, hunkering down, and defending them at all costs. Getting fat on existing businesses is no longer an option. In the 1920s, the average life expectancy of a Fortune 500 company was sixty- seven years. By 2015, it was fifteen. What does Day Two look like? It looks a lot like death. From its origins as an online bookseller, Amazon has lived its Day One mantra, inventing new businesses with abandon, with a near-complete disregard for how they might challenge its existing revenue streams. The company remains a bookseller, but it’s also a clearinghouse for almost every imaginable product, a thriving third party marketplace, a world- class fulfillment operation, an Academy Award–winning movie studio, a grocer, a cloud services provider, a voice- computing operating system, a hardware manufacturer, and a robotics company. After each successful invention, Amazon returns to Day One and figures out what’s next.

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Find out more about the secrets behind the tech giants’ sustainable success, in Always Day One.

The Four, An Excerpt

Posted on by Penguin India

In his book, ‘The Four’, Scott Galloway deconstructs the strategies of the Four that lurk beneath their shiny veneers. He shows how they manipulate the fundamental emotional needs that have driven us since our ancestors lived in caves, at a speed and scope others can’t match.
Here’s an excerpt from the book.  
Over the last twenty years, four technology giants have inspired more joy, connections, prosperity, and discovery than any entity in history. Along the way, Apple, Amazon, Facebook, and Google have created hundreds of thousands of high-paying jobs. The Four are responsible for an array of products and services that are entwined into the daily lives of billions of people. They’ve put a supercomputer in your pocket, are bringing the internet into developing countries, and are mapping the Earth’s land mass and oceans. The Four have generated unprecedented wealth ($2.3 trillion) that, via stock ownership, has helped millions of families across the planet build economic security. In sum, they make the world a better place. The above is true, and this narrative is espoused, repeatedly, across thousands of media outlets and gatherings of the innovation class (universities, conferences, congressional hearings, boardrooms). However, consider another view.
Show Me the Trillions
While billions of people derive significant value from these firms and their products, disturbingly few reap the economic benefits. General Motors created economic value of approximately $231,000 per employee (market cap/workforce).20 This sounds impressive until you realize that Facebook has created an enterprise worth $20.5 million per employee… or almost a hundred times the value per employee of the organizational icon of the last century.21,22 Imagine the economic output of a G-10 economy, generated by the population of Manhattan’s Lower East Side.
The economic value accretion seems to be defying the law of big numbers and accelerating. In the last four years, April 1, 2013–April 1, 2017, the Four increased in value by approximately $1.3 trillion (GDP of Russia). Other tech companies, old and new, big and bigger, are losing relevance. Aging behemoths, including HP and IBM, barely warrant the attention of the Four. Thousands of start-ups fly by like gnats hardly worth swatting at. Any firm that begins to show the potential to bother the Four is acquired—at prices lesser companies can’t imagine. (Facebook paid nearly $20 billion for five-year-old, fifty employee instant messaging company WhatsApp.) Ultimately, the only competitors the Four face are . . . each other. Safety in Hatred Governments, laws, and smaller firms appear helpless to stop the march, regardless of the Four’s impact on business, society, or the planet. However, there’s safety in hatred. Specifically, the Four hate each other. They are now competing directly, as their respective sectors are running out of easy prey.
Google signaled the end of the brand era as consumers, armed with search, no longer need to defer to the brand, hurting Apple, who also finds itself competing with Amazon in music and film. Amazon is Google’s largest customer, but it’s also threatening Google in search—55 percent of people searching for a product start on Amazon (vs. 28 percent on search engines such as Google).25 Apple and Amazon are running, full speed, into each other in front of us, on our TV screens and phones, as Google fights Apple to be the operating system of the product that defines our age, the smartphone. Meanwhile, both Siri (Apple) and Alexa (Amazon) have entered the thunderdome, where two voices enter, and only one will leave. Among online advertisers, Facebook is now taking share from Google as it completes the great pivot from desktop to mobile. And the technology likely creating more wealth over the next decade, the cloud—a delivery of hosted services over the internet—features the Ali vs. Frazier battle of the tech age as Amazon and Google go head-to-head with their respective cloud offerings. The Four are engaged in an epic race to become the operating system for our lives. The prize? A trillion-dollar-plus valuation, and power and influence greater than any entity in history.
So What?
To grasp the choices that ushered in the Four is to understand business and value creation in the digital age. In the first half of this book we’ll examine each horseman and deconstruct their strategies and the lessons business leaders can draw from them. In the second part of the book, we’ll identify and set aside the mythology the Four allowed to flourish around the origins of their competitive advantage. Then we’ll explore a new model for understanding how these companies exploit our basest instincts for growth and profitability, and show how the Four defend their markets with analog moats: real-world infrastructure designed to blunt attacks from potential competitors. What are the horsemen’s sins? How do they manipulate governments and competitors to steal IP? That’s in chapter 8. Could there ever be a Fifth Horseman? In chapter 9, we’ll evaluate the possible candidates, from Netflix to China’s retail giant Alibaba, which dwarfs Amazon on many metrics. Do any of them have what it takes to develop a more dominant platform?

Learning from Mistakes

Posted on by Penguin India

Jeff Bezos, the owner of mighty Amazon constantly features in one of the most successful entrepreneurs of modern time. The way he has steered Amazon through all these years, shows his dedication and skill to make things work against all odds. However, even he failed. A lot of articles have come up post this and many different perspectives have tried to solve this problem from a different angle. Jeff Gothelf and Josh Seiden’s book, Sense and Respond tries to look at such cases from a newer perspective:
‘Amazon’s 2014 Fire Phone disaster is a classic example and, oddly, one that comes from the very same company that developed and frequently uses many of the sense and respond techniques we’re discussing—a company we laud in chapter 1 for that reason.
Motivated by consumers’ increasing use of mobile devices, Amazon began the Fire Phone effort in 2010, just as the iPhone 4 was hitting the market. Mobile users were becoming a more important source of traffic to Amazon, and the company wanted more control of the mobile store than Apple would allow. Apple’s rules about what companies can and can’t do in iOS apps include strict rules about commerce, including one that stipulates that Apple gets a 30 percent share of each in- app sale. 2 (The reason you can’t buy a book on the iOS Kindle app is that Amazon doesn’t want to pay Apple 30 percent of each sale.) So Amazon created the Fire Phone initiative to solve a business problem: it wanted complete control over the store that its customers visited on their mobile devices.
But what would be the value to customers? They struggled to find it, in part because of a strict culture of secrecy around this product. Jeff Bezos, CEO of Amazon, had lots of ideas for cool features. But cool and valuable are not the same thing. Over time, Bezos exerted an increasingly heavier hand in the design and development of the Fire Phone and, according to published reports, ignored feedback from his team that questioned his approach. 3 There was no conversation with the market here, only Bezos talking. He insisted that the phone have a series of fl ashy features like Dynamic Perspective, a 3-D display that didn’t require special glasses and could be seen from all angles; but it delivered little consumer value. Bezos assumed that fl ashy hardware features would make the phone more desirable to consumers than an iPhone. Without a continuous two way conversation with his target audience to guide the development of these features, though, Bezos was making a huge guess.
He guessed wrong. Four years later, in July 2014, the Fire Phone went on sale in the United States. Within days it was clear that consumers were unimpressed— with the design, with the ecosystem, and with the gimmicky features Bezos had pushed for so hard. Priced at $199, the Fire Phone was intended to compete directly with Apple’s iPhone, but consumers didn’t see the value. Instead, they saw it for what it was—a way to easily get to Amazon’s store in a way that was better for Amazon but not significantly better for customers.
After a $170 million write- down of unsold inventory, the Fire Phone was available for 99 cents before finally being sunset in late 2015. The behind- the- scenes stories reveal the arrogance in the top down decision- making process that Bezos led. Although people on the team pushed back, they ended up deferring to the boss. After all, he’d been right many times before. Why wouldn’t he be right again this time?
It might have helped if Bezos had listened to the market. Had he approached some of these decisions as assumptions to be tested and questions to be answered, rather than hunches to be followed blindly, things might have been different.’
You can get your hands at the book here.
This is an excerpt from Jeff Gothelf and Josh Seiden’s Sense and Respond.
Credit: Abhishek Singh

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