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Analyst’s Take: Examining the Continuing Saga of Walmart.com vs Amazon

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Walmart boxes fulfillment center

The cover story of the new issue of Bloomberg Businessweek, titled “Can Walmart’s Expensive New E-Commerce Operation Compete With Amazon?,” is a very detailed look at Walmart.com written by Brad Stone, the author of the excellent history of Amazon, “The Everything Store” and Matthew Boyle.

Clearly the journalists who co-wrote it had a great deal of access to the management of both Walmart and Walmart.com, and I can’t help but wonder if they got a touch sucked in. Maybe the following passage is facetious, but if it isn’t, it’s rather fawning:

“[Walmart CEO Doug] McMillon has gradually come to shed the customary Walmart suit and tie in favor of casual sport coats and open-collar shirts, and plays up the notion that he’s a ‘bit of a gadget guy.’ He once bought a Kindle for his mother, and regularly invites tech luminaries such as Facebook Inc.’s Sheryl Sandberg to senior staff meetings.”

I suspect the folks at Amazon do not think that once buying a Kindle for one’s mother is the definition of a “gadget guy.” 

The article, which you can read here, is decidedly informative, as well as rather juicy, and it does point out some of the challenges that Walmart.com faces, but it also underplays three of Amazon’s not secret advantages. The first is the company’s unparalleled trove of data, and the many well-trained employees who know how to analyze it and what to do with it. The second is the enormous power of Prime.

Amazon famously does not disclose the number of Prime members (as well as many other metrics of interest), but the article cites a report that estimates one half of U.S. households are Prime members. It does not, however, dig into the power of Prime.

Amazon has shared that Prime members spend much more than other Amazon shoppers, which makes total sense. Just as one wants to amortize the cost of a Costco card, even though most shoppers probably do so on the first few trips, so too with Prime. If you have it, you use it in order to get a return on your investment. It’s not just about the free shipping, although that’s clearly a very attractive benefit. Finally, not even mentioning Alexa seems absurd, given that Alexa/Echo provide Amazon with an important means for both spurring purchases and collecting data, and Walmart does not have anything comparable. 

The latest issue of the Economist has several articles about the importance of data that are essential reading for anyone who cares about the future of Walmart, the future of retailing, and the future in general. Here, one about the new economy and one about regulation.

Faye Landes, co-founder and general partner of Back to the Future Ventures, advises emerging consumer and retail companies on strategy, branding and fundraising. She was one of Wall Street’s leading consumer and retail analysts for over 20 years and was widely recognized for her ability to anticipate sweeping trends, such as the widespread adoption of activewear. She has frequently appeared on CNBC, Bloomberg TV and other media outlets and has presented at industry conferences all over the world. Read her “Analyst’s Take” column here weekly.

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