Amazon and Walmart's top competitive battleground within the $5 Trillion retail market is Grocery
Updated: Aug 5, 2022
As food is constantly replenished, it’s where money is to be made.
People tend to be very loyal to where they buy Groceries and lowest prices aren’t sufficient to win shoppers, who want value with a breadth of products and services. These retail giants are serving up new channels to get people to switch over and then retain them.
WSJ video (Apr 2022) talks about how each retailer is investing for growth.
AMAZON’s heritage is ecommerce of which it has ~ 40% share. It focuses on getting products to consumers as quickly as possible through its 380+ fulfillment centers worldwide. It is now pushing into brick-and-mortar stores, primarily in Grocery, with Amazon Fresh and Whole Foods.
Amazon Fresh, now with 27 stores, is priced to compete with Walmart and also serves as a platform for Amazon’s innovative technology, e.g., “Just Walk Out”, that allows customer to shop and leave without visiting a checkout.
WALMART had $327B sales last year from physical stores and is dedicated to “always low prices”. It is investing heavily in ecommerce, adding thousands of vendors to its online marketplace. It also launched Walmart+, a subscription service along similar lines to Amazon’s Prime.
Walmart has only 31 dedicated ecommerce fulfilment centers, and leans into its 3,500+ physical store footprint to serve both as fulfillment centers and for BOPIS (buy online, pick up in store) which has been one of its ecommerce success drivers. It plans to attach 100 more smaller fulfillment centers to existing stores.
Their competition is going beyond retail as they seek more profits through selling Ads - Amazon has been growing well here and Walmart entering too.
While their shopper profiles have been different in the past, with, for example, Walmart skewing lower income while Amazon is higher, in this battle there may be more convergence.
What do you think?