As Amazon Rises, Could Walmart Fall?
Despite another #1 ranking on the world’s largest global retailers list, Jeremy King—WalMartLabs’ chief technology officer—knows the company’s “biggest issue [is] playing the catch-up game.”
It’s well known in the tech-world that Amazon — the world’s largest online retailer is a serious threat for the once invincible retail chain giant. Until recently, Walmart has been able to neglect its e-commerce platform by catering to its traditional–and most importantly loyal–customers in-store. More affordable and advanced technology over the past few years, however, has shifted traditional in-store purchasing habits; even amongst conservative shoppers. E-commerce is quickly becoming an essential aspect of life…and for good reason.
It’s no surprise that many of Walmart’s loyal customers, comprised primarily of shoppers more loyal to low prices than the actual chain, now favor online shopping. Amazon’s rapidly growing inventory and extremely competitive prices—made possible due to low sales taxes and overhead production costs—is a dream come true for many of Walmart’s former bargain hunters. The online shopping experience of Amazon.com—now the world’s largest online retailer–is unparalleled in today’s e-commerce world. The company’s constant innovations provide a more convenient and simple experience, lower prices, appealing reward programs, and enhanced customer service. While Walmart struggles to make up for lost time, Amazon is on a roll, pursuing ambitious growth initiatives through moves including acquiring Zappos in 2009 and its recent $775 million acquisition of warehouse robot manufacturer Kiva Systems—an investment Walmart passed up shortly prior.
Key to Amazon’s triumph of the online market is constant attention to customer service. The advent of Kiva System’s robots tremendously improves Amazon’s efficiency, leading to enhanced service and, consequently, happier customers. Despite Walmart’s ambitious goals to compete in the online market with Amazon, the company has—at least up until this point—failed to sufficiently invest in its online platform. Moreover, Amazon does a phenomenal job generating innovative options to increase net income and retain customers. Amazon Prime—the hit service offering free two-day shipping for a yearly fee of $79—is one such option.
From innovative technological solutions to the company’s recent announcement to enter the high-fashion business, Amazon acts constantly to maintain its elite role in the online world. This aggressive, “never settle” attitude, coupled with cost-leadership and focus on customer-differentiation, has allowed Amazon to rise to the top. Although it’s unlikely that e-commerce will ever completely over-take traditional in-store shopping, Walmart must adopt a more aggressive, pro-active approach if they aspire to compete with Amazon in the online game.