Depending how Apple and Walmart performed in the month of December will determine who finishes the year No. 3 in American online sales for 2018.
Assuming Walmart continues its winning ways, the ranking will change. Meanwhile, Amazon will enter 2019 with around 47% of online sales and Walmart at No. 3 with less than 10% of that number.
It is fair to say Walmart has much work to do. While I concede the challenge ahead is great, I want to share a couple of reasons why Walmart might actually have a competitive advantage over Amazon in the longer run, and why it may be a game changer.
AMAZON IS A MARKETPLACE
To understand Walmart’s potential advantage, first look at what drives Amazon’s retail business — its superpowers, in effect.
Amazon is laser-focused on its shopper. It spends staggering money on developing new ways to understand what its customers will spend money on, not simply what they do spend money on. Amazon’s focus is on the best talent and systems to understand the shopper in full spectrum to maximize their basket opportunity.
Secondly, Amazon is focused on streamlining its internal processes and costs across warehousing, fulfillment, transportation, air and deep marine. The company has reimaged the way things can work by embedding technology in ways not seen before. This is all designed to drive efficiency and cost savings, where Amazon has control of the process.
Interestingly, Amazon operates differently on the sourcing side of the business. It is easy to think of Amazon as totally automated. In point of fact, it has a complicated and manual oriented system. While there are some great innovations for all things content, managing the actual business requires a great deal of communication to get things accomplished. We do not see the kind of strategic engagement with Amazon’s suppliers and manufacturers to learn about how to work together to achieve goals.
Amazon only sees items, not manufacturers. It does not seek to partner on joint goals and mutual success. It focuses on maximizing on its independent interests. In the end, Amazon is focused on lowering its own costs, not looking to lower system-wide costs through partnership and planning.
WALMART HAS REALLY SHARP TEETH
Having sharp teeth doesn’t necessarily make you a dinosaur.
Walmart’s hidden advantage is understanding how to drive the lowest delivered cost per pound of anything by leveraging and optimizing internal and external networks. The retailer has pioneered and honed those capabilities over the years and, ironically, they may be more material today than ever before.
Walmart’s superpower is collaboratively engaging its supplier/manufacturer base. This “partnership” ensures everything from product quality to in-stocks are where, when and how the consumer wants it — and, oh by the way, on average at the best sustained price for the consumer.
Today’s consumer is trying to save time and frustration, and there will be lots of innovation to figure out what works best. At some point, we will reach a point of diminishing returns on time savings, and then the game will change. It will swing back to consistent supply to the shopper, when and how they want it, at the best price.
This is in Walmart’s wheelhouse. It is a point of leverage where it can employ its unique model of partnering with their manufacturers, leveraging what each does well and sharing the synergy of the shopper. While best-in-class today, Walmart must drive automation of partner collaboration to speed it up and increase reliability.
T-REX OR GREAT WHITE
Walmart invented the supplier ecosystem, and it remains its “X factor.” It can evolve this unique supplier collaboration approach to wow the online shopper with consistent delivery times and price savings. This is not how Amazon operates and simply not in its DNA today.
In the end, Walmart’s unique partnership model incentivizes its manufacturers to engage with the company in ways to lower overall complexity and cost to serve shoppers needs and wants.
Editor’s note: Clint Lazenby is the co-founder of Legacy Retail Solutions in Rogers. The opinions expressed are those of the author.