Wednesday, May 17, 2017

(The Big Disrupt) Amazon: Why Walmart are going to lose to Amazon

There are many reasons why Walmart will lose to Amazon but the only reason that matters is that Walmart cannot compete beat never mind beat Amazon's wildly successful Amazon Prime service. 

Walmart has tried to compete with Amazon prime service most notably with it shipping Pass service that offered 2 day shipping for $50, nearly half the price of a prime subscription fee, only to fall flat on their face and do away with Shipping Pass just seven months later. 

What's concerning isn't that Walmart tried compete with Amazon prime membership program and failed miserably but that the company doesn't seem aware of why Amazon Prime is so successful. Everybody knew that Shipping Pass was dead on arrival because it was competing with amazon prime on price alone ignoring the fact amazon prime attracts and, most importantly, keeps customers loyal to amazon by offering other services that come with prime membership such as amazon prime video at a price. 

Prime is why Amazon can enter other markets and can turn them upside down or at the very least be competitive  

For Walmart to even come close to competing with amazon prime, Walmart would have to make sizeable investments in content along with the costs of providing 2 day free shipping which Walmart clearly aren't prepared to do and rightly so. Why Walmart is even attempting to take on Amazon at its own game is makes no sense as its main advantage over Amazon lies in its stores. Walmart can take a bite out of amazon the moment it figures out it's click and collect operation which would put pressure on Amazon to ramp up its plan to build checkout free stores, a business Amazon have yet to master with various media reports . 

Walmart even trying to compete reads to me like a very stupid idea and Walmart is going to pay for it.       

No company is loved by everybody and despite providing low prices and mass employment for many Americans, Walmart are one of the most hated companies in modern America. Almost all companies that dominate their market are hated but everyone seems to have a special place in their hearts when it comes Walmart as Walmart has come to represent everything people don't like about big business. 

While you might wonder why a company so hated is the first port of call for grocery purchases in the US, the answer is quite simple: price. Walmart from the outset has set its stall on providing the lowest prices and has mostly come good on its promise but in an age where Amazon and German discounter Aldi can match or beat Walmart rock bottom prices, Walmart are experiencing pressure on all fronts. 

Walmart, fully aware they can no longer compete purely on price, have realised that they must work on building customer loyalty but with the company often coming dead last among its competitors in customer satisfaction surveys and its aisles and parking lots becoming venues for fights, meth labs and old fashioned murder on an almost weekly basis, saying Walmart has its work cut out is an understatement to say the least. 

However that said, Walmart aren't the world biggest retailer for nothing lack of and with the right strategy can give Amazon a real run for its money but looking at the public statements offered by its management, its insistence to compete on price despite increasingly losing to competitors on it sole brand promises, and it's concerning lack of ability to keep customers, Walmart look like a company that's fighting a battle it knows it's going to lose.  

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