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James B. Stewart writes in the NYT that for the past 16 years Walmart has often acted as though it hoped Amazon would just go away. When Walmart announced last week that it was significantly increasing its investment in e-commerce, it tacitly acknowledged that it had fallen far behind Amazon in the race for online customers. Now, the magnitude of the task it faces has grown exponentially as e-commerce growth continues to surge globally. "Walmart.com has been severely mismanaged," says Burt P. Flickinger III. "Walmart would go a few years and invest strategically and significantly in e-commerce, then other years it wouldn't. Meanwhile, Amazon is making moves in e-commerce that's put Walmart so far behind that it might not be able to catch up for 10 more years, if ever."
In 1999, Amazon was a fledgling company with annual revenue of $1.6 billion; Walmart's was about $138 billion. By last year, Amazon's revenue was about 54 times what it was in 1999, nearly $89 billion, almost all of it from online sales. Walmart's was about three times what it was 15 years before, almost $486 billion, and only a small fraction of that — 2.5 percent, or $12.2 billion — came from Walmart.com. Walmart's superefficient distribution system — a function of its enormous volume and geographic reach — was long the secret to Walmart's immense profitability. Ravi Jariwala, a Walmart spokesman, says that Walmart is building vast new fulfillment centers and is rapidly enhancing its delivery capabilities to take advantage of its extensive store network to provide convenient in-store pickup and adds that 70 percent of the American population lives within five miles of a Walmart store. "This is where e-commerce is headed," says Jariwala, which is to a hybrid online/in-store model. "Customers want the accessibility and immediacy of a physical store," along with the benefits of online shopping.
(Score: 3, Interesting) by TrumpetPower! on Sunday October 25 2015, @12:20AM
Amazon offers same-day delivery for lots of stuff, next-day delivery for most things, and second-day delivery for everything. And, while, yes, there are rare times when you need something now Now NOW NOW!...in the overwhelming majority of cases, it's far easier for the order to just magically show up on your doorstep. Sure, maybe it's only a ten-mile round trip to the store...but at an average driving speed of 35 MPH, that's almost 20 minutes on the road, plus at least another five minutes each trudging through the parking lot (in what kind of weather?) and standing in line to pick it up...at least half an hour wasted that way compared to the magic of it just showing up on your doorstep. And what if whatever you're buying is bulky or heavy or there's a lot of it? Would you rather load it into a cart or three, unload the cart into your car, unload your car onto the driveway, and haul it from the driveway into the house...or just haul it from your doorstop into the house and let the delivery guy deal with all the loading and unloading? On the flip side, what if it's something cheap and inconsequential, like a box of paper clips...are you really going to make the trip to the store just for that, or would you rather have it show up in the mail the next day?
Hell, the Amazon model even beats Walmart when it comes to environmentalism. It's far greener to have a small number of loaded delivery vans make a single pass each through the neighborhood than it is for all those individual single-passenger vehicles to make the round trip.
And then there's the question of overhead. Amazon's operations require far fewer people, far less real estate in far cheaper parts of town, no real estate wasted on parking lots, much lower electricity bills, and on and on and on. The exact same box of laundry detergent costs Amazon much less to stock, store, sell, and deliver than it does Walmart -- and if Walmart can't compete on expenses, how are they supposed to compete on their core marketing spiel of low prices?
No, I'm afraid Walmart is toast -- at least, so long as they continue to think that the bricks-and-mortar model is the way of the future, not the past.
Cheers,
b&
All but God can prove this sentence true.
(Score: 2) by RedGreen on Sunday October 25 2015, @12:49AM
"And then there's the question of overhead. Amazon's operations require far fewer people, far less real estate in far cheaper parts of town, no real estate wasted on parking lots, much lower electricity bills, and on and on and on. The exact same box of laundry detergent costs Amazon much less to stock, store, sell, and deliver than it does Walmart -- and if Walmart can't compete on expenses, how are they supposed to compete on their core marketing spiel of low prices?
No, I'm afraid Walmart is toast -- at least, so long as they continue to think that the bricks-and-mortar model is the way of the future, not the past."
Meh call me when they actually make a profit then Walmart may have something to worry about.
http://www.ibtimes.com/amazon-nearly-20-years-business-it-still-doesnt-make-money-investors-dont-seem-care-1513368 [ibtimes.com]
"I modded down, down, down, and the flames went higher." -- Sven Olsen
(Score: 2, Informative) by Anonymous Coward on Sunday October 25 2015, @04:18AM
That's facile. Amazon has been spending their profits on infrastructure. Walmart hasn't. A business that invests in its own future the a business that has a future.
(Score: 2) by VLM on Sunday October 25 2015, @11:50AM
Both pretty much have to financially position themselves as wall street demands or the stock price will tank, and the street doesn't want profits from amazon at this time. Which could change.
(Score: 2) by RedGreen on Sunday October 25 2015, @01:58PM
Yeah right, Walmart just this last year spent tons of cash upgrading the local store here to sell all kinds of additional products. Fact remains Amazon as far as I know has never made a profit Walmart on the other hand rakes it in hand over fist year after year even with spending mega bucks opening new stores/re-doing the older ones. The pie in the sky oh it is on the web so it does not have to make a profit routine is getting old and eventually the bubble is going to pop on that survivor of the past bubbles and it will go tits up.
"I modded down, down, down, and the flames went higher." -- Sven Olsen
(Score: 2) by Bot on Sunday October 25 2015, @09:12AM
Profit matters, but whose profit?
Amazon reminds me of Schlecker here in the eu.
They open up 4 stores in a small town and dump products.
Then they go belly up.
In the meantime the competition falls in hard times, and they ask for loans. -> Profit for the banks.
Therefore banks have all to gain from cutthroat competition even if the players go eventually under. Ikea, Walmart, Amazon, it doesn't really matter if they stand on their own.
The funny thing is that people don't even notice. Yesterday HEY, DISCOUNT PRICE, COOL. Today SORRY PAL I CAN'T EMPLOY YOUR DAUGHTER, SHOP IS CLOSING DOWN.
When the first supermarkets appeared some people I know said: I'm not gonna shop in them, they kill stores. Turns out such naive luddites were more accurate than everybody in TV and mags who was praising the efficiencies of the system.
Account abandoned.
(Score: 2) by Whoever on Sunday October 25 2015, @01:00AM
Since I signed up for Amazon Prime and can get items in 2 days, I am far more aware that I can wait a couple of days for many purchases. I often don't need immediacy other than groceries (and even for groceries, I mourn the loss of Webvan).
Jariwala is in denial, since the only way Walmart can win with the "Clicks and mortar" model is if he is correct about immediacy.
(Score: 3, Interesting) by MichaelDavidCrawford on Sunday October 25 2015, @03:17AM
My mother still refuses to shop online. There are some shops such as Powells that offer live human salespeople; she will call them on the phone.
The stores I shop in, I do so in large part because I like talking to the people there.
I also want them to have jobs.
A while back I tried to pay cash for my AT&T bill. They told me there would be a $15.00 surcharge were I to pay cash at the register, rather than with my debit card at the kiosk by the door.
"I just rode the bus twenty miles so you would have a job."
The next time I paid my bill, while there was still a kiosk, it would accept cash. Some progress, I guess.
Yes I Have No Bananas. [gofundme.com]
(Score: 0) by Anonymous Coward on Sunday October 25 2015, @03:50AM
I don't buy much "stuff" on a regular basis, just groceries & gas. I'm old enough that I already have most of the things I want.
When I do buy something, often I want to look at it (construction, quality, etc) before accepting it. Since Walmart is less than 5 minutes away by car or bicycle, the ship-to-store option is fine. I open the box in the store and return on the spot if it isn't what I want.
I've never waited more than 5 minutes in line for a pickup at Walmart.