Can Walmart Catch Amazon In E-commerce? - VoiceTube: Learn English through videos!

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When Amazon started selling more than just books in the
late 1990s, it suddenly entered into a rivalry with
the biggest name in retail.
Always low prices, always Walmart.
Walmart has been at the helm of American shopping for
58 years.
It employs more people than any other company in the
world. And 90 percent of Americans live within 10
miles of one of Walmart's more than 4,700 U.S.
stores. The staggering size of Walmart kind of escapes
people. It's the largest corporation in the world in
terms of revenue. Yet when it comes to e-commerce,
Amazon is the clear leader, with 38.7 percent of the
market share compared to Walmart's 5.3 percent.
And with the global pandemic shifting shopper's
behavior for good, dominance in online shopping is now
paramount. So if you're that second site, you got to
be really good. You don't have to be as good as
Amazon, because no one will get there.
That's utopia. In perhaps its clearest competitive
move against Amazon to date, Walmart is now launching
Walmart Plus. The membership program is meant to rival
Amazon Prime, offering benefits that can't be
replicated online.
These guys are toe-to-toe and nobody wants to stop
swinging. Nobody wants to back down.
You know, the consumer is ultimately the beneficiary,
clearly. Here's a look at how Walmart Plus compares to
Amazon Prime and all the other ways Walmart is trying
to catch up as the pandemic makes online shopping an
increasingly crucial part of doing business.
Walmart has been working behind the scenes since at
least 2018 to create a competitor to Amazon Prime.
From our data study, we found that two thirds of people
that had already joined our premium loyalty program
would join another one.
Although the landing page says Walmart Plus is coming
soon, the pandemic delayed its planned release in the
spring. Walmart stock surged seven percent when it
looked like it would launch in July, but that didn't
happen either. When Walmart Plus is available, members
will likely pay $98 for benefits like unlimited
same-day delivery on groceries from the 1,600 of its
4,700 plus stores that do grocery delivery n ow.
When we did our data study, 81 percent of the consumers
joined Amazon Prime because of faster free shipping.
Only two percent joined because of grocery delivery.
So I think it's a real opportunity to leverage what
they already have in groceries and maybe what Prime
doesn't. And just this week, Walmart announced a
partnership with Instacart, testing out same-day
grocery delivery in four markets across California and
Oklahoma. Other perks are rumored to include early
access to sale events, discounts at gas stations
outside of Walmarts and Walmart-owned Sam's Club
stores and reserved parking spots in store lots.
As you think about Prime, 150 million, why would you go
head to head with that? If you take a unique approach,
which it sounds like Walmart is doing, you might be
able to get a lot of those customers.
Amazon launched Prime for $79 a year in 2005, at a time
when Walmart's profits were greater than all of
Amazon's revenue. If you look back at 2005 Prime had
one benefit, fast and free shipping, two-day shipping,
which was like unheard of.
Fifteen years later, some 150 million Prime members pay
$119 a year for one-day shipping on more than 10
million items with no minimum purchase amount,
same-day shipping on some three million items,
two-hour grocery delivery in 2,000 plus cities, deals
and sales events like Prime Day and access to Amazon's
entertainment branch, Prime Video, Amazon Music, Prime
Reading, Prime Gaming and Amazon Photos.
It's a pretty compelling value proposition, and that's
what anyone will have to deal with, w hat if they want
to try to compete with Prime?
Walmart doesn't have any entertainment offerings of its
own, now that it sold Vudu in April.
P rime members make up about 65 percent of Amazon's
customers and the program has a 95 percent renewal
rate after two years.
Walmart started chasing this type of loyal customer in
May 2019 by offering free next-day delivery on orders
over $35, less than a month after Amazon announced its
default one-day shipping.
With Walmart Plus, all orders will default to free
one-day shipping just like Prime.
Despite the launch of Walmart Plus and free fast
shipping, Walmart still lacks one big thing that
Amazon has - sheer volume of inventory.
Walmart.com has about 50,000 vendors selling items
online, while Amazon has 8.7 million.
That's why in 2016, Walmart bought discount online
retailer Jet.com for 3.3 billion dollars.
The acquisition brought relationships with a slew of
brands that were already comfortable selling on
Jet.com .
They are on track to more than quadruple their online
business since they acquired Jet.
It was an uh-oh moment for every other brick-and-mortar
retailer, because now the biggest brick-and-mortar guy
is now, you know, moving heavily online.
E-commerce is a scale game and you want to get as much
leverage as you can on your fixed infrastructure.
And as you get bigger, cost of goods goes down and you
get more leverage. Marc Lore spent two years at Amazon
before breaking off to start Jet.com , working to
undercut prices from the e-commerce megastores.
Walmart's purchase of Jet.com was the big move that
brought it into the big leagues of online shopping.
When the deal was made in 2016, Lore signed a five
year contract to run Walmart's e-commerce division.
I'm so excited to be at Walmart, having a lot of fun.
We're going to keep talking to you because I think that
you're the most inventive man in retail today.
Walmart shut down Jet.com in May, but it had already
brought an entirely new branch of online sellers onto
its marketplace. Walmart CEO Doug McMillon says he
would buy it all over again.
If you look at the trajectory of our business, it
changed when we made that acquisition and we've been
able to attract brands to Walmart.com - S'well, R
ay-Ban and Champion.
Historically, Walmart.com didn't sell things from
third-party vendors, but since the Jet.com acquisition
the number of products sold on Walmart.com has grown
up to 10 times higher, and the number of sellers on
its site doubled just in the last year.
So they started attracting more brands.
They retooled their website to be more streamlined and
more intuitive, more user-friendly.
And last year, Walmart partnered with Advance Auto
Parts. Walmart was not going to be a 100,000 SKU auto
parts retailer on its own.
They get that with Advance Auto.
This is probably the largest third-party relationship
that any online retailer has with a brick-and-mortar
retailer. And in an effort to reach a new type of
customer, Lore spearheaded the purchase of several
specialty apparel companies like Bonobos, ModCloth and
Eloquii, a lthough some have been sold again since.
A big portion of Walmart store customers are
lower-to-middle-income. I think what they tried to do
here and through the Jet.com brand was to continue to
go up market and go for more profitable customers,
urban millennials. And then they also introduced the
service Jetblack, which is an upscale personal
shopping service. For a large fee, Jetblack allowed
New York Walmart customers to text orders to personal
shoppers for home delivery.
But Walmart shut it down in February after it only saw
about 600 active members.
If we think about the dynamics of the very, very
affluent and wealthy today, I don't know if Walmart is
necessarily the company to be housing a brand like
that. But in June, Walmart pivoted again, announcing a
major partnership with Shopify.
Often referred to as the king of mom-and
pop-retailers, Shopify helps more than 1.4 million
small businesses run their online stores.
Now, these small businesses have a channel to try
selling on Walmart.com.
For now, Walmart says it's adding 1,200 of Shopify's
top merchants to its site in 2020.
Walmart wants a curated assortment on the website.
I mean, Amazon has a very wide-ranging third-party
business, and with th at comes some risk.
The partnership with Shopify is really important, I
think it's very strategic.
And I do think it is an attempt to pull away those
third-party sellers on Amazon.
There has been kind of a lot of tension between
third-party sellers and Amazon.
On July 29th, Jeff Bezos testified before Congress for
the first time in Amazon's 26 year history, partly in
response to questions about reported use of
third-party seller data to develop Amazon's own
competing products. The House Judiciary Committee is
investigating whether Amazon, along with Apple,
Facebook and Google, need to be governed by stricter
antitrust laws.
Why should a third-party so list their product on
Amazon if they're just going to be undercut by
Amazon-own ed product as a result of data you take
from them? I think what I want you to understand, and
I think it's important to understand, is that we have
a policy against using individual seller data to
compete with our private label product.
You couldn't assure Ms. Jayapal that that policy isn't
violated routinely.
While Amazon is battling to keep the trust of its
third-party sellers, Walmart still has a long way to
go if it wants to catch up with the millions of
third-party sellers that make up more than half of
Amazon's sales. The Walmart marketplace is a lot
smaller, so you could be, quote unquote, crushing it
on page one on Walmart and you're still not getting
that many sales. Still, Walmart has one big, long
standing advantage over Amazon, its 11,500 global
stores. If you're a third-party seller, like if you
can get into brick-and-mortar Walmart, you're going to
crush whatever sales on Amazon you're doing.
For sellers choosing where to reach customers, stores
are a big bonus and much more scalable.
So this diet pill company I worked at, they had 30
different products that we were selling on Amazon.
I launched a whole bunch of them. We brought their
sales from one million to three million.
And I thought that was like the greatest thing in the
world. But that was nothing, because I would see
purchase orders come across my desk for the Walmart
brick and mortar side, for the Walmart stores, there
would be like two million dollars just for like one
region of the United States.
Walmart stores also help keep down its costs in the
most expensive area of online retail - shipping.
If you can leverage those stores as your fulfillment
centers, meaning if I'm going to purchase something
and I'm in the Philadelphia area, have it come from
the store that's three blocks from my house as opposed
to Virginia , you know, price points go down and speed
goes up. Amazon has been spending wildly to try and
control the expensive shipping process, but it's 175
fulfillment centers and own network of planes, trucks
and contracted delivery drivers don't come close to
the reach of Walmart's 4,700 stores that allow its
trucks and drivers to travel a fraction of the
distance. Walmart had the advantage of getting product
from distribution center to the store, and then the
consumer handles the last mile for a lot of it.
Walmart uses its stores as distribution centers for
products, but also has its own dedicated network of
warehouses without a front-facing store.
Walmart remains dominant in another sector that's
largely dependent on brick-and-mortar stores -
groceries. We're not very densely populated, and so
it's hard to service, in an e-commerce model, grocery.
So what that means is that Amazon is really at a
little bit of a disadvantage relative to Walmart.
They have stores within 90 percent of the population
in the United States. Grocery sales account for more
than half of Walmart's U.S.
revenue, making Walmart the nation's biggest grocer.
Walmart's been selling groceries directly to customers
since the 80's, and the online sale of groceries is
now boosting Walmart's overall online sales.
The percentage of all U.S.
grocery sales happening online is set to double from
20 percent in 2019 to 35 to 40 percent this year a nd
next. You find your grocery vendor and you tend to
stick with them. You also get a treasure trove of data
from grocery customers about their preferences.
A nd you can use that dat a, and I believe Walmart
will use that data, to sell them other things.
I think that Walmart is going to win in this grocery
battle versus Amazon.
When Amazon bought Whole Foods for 13.7 billion in
2017, it was a clear move to compete with Walmart.
But with roughly 475 stores, Whole Foods has about a
tenth of the locations as Walmart does in the U.S.
You cannot find a tougher brick-and-mortar segment to
get into than food.
You've got to manage a million vendors, produce is
hard, meat is tough.
And they chose to get into that business.
They're still learning. Then in 2019, a month after
Amazon announced free two-hour grocery delivery for
Prime members in 2,000 regions, Walmart announced a
membership program offering unlimited grocery
deliveries from 1,400 stores.
It costs $12.95 a month or the same $98 annual fee of
the new Walmart Plus membership.
Or for an extra seven dollars a month, Walmart will
deliver groceries straight into your fridge in a
handful of cities. Digital grocery is the next big
battleground in e-commerce.
It's a one trillion dollar retail category that is
today the least penetrated category online.
So as it continues to grow at outsize d rates, there
are tens of billions of dollars at play.
In one survey before the pandemic, about 39 percent of
U.S. consumers reported having shopped online for
groceries at least once.
By May, that number was nearly 80 percent.
But how many people are going to go back to
conventional shopping or how many people are going to
stay with buying their staples online because they
can? While the pandemic boosted the importance of fast
grocery delivery, Walmart has an even faster, more
cost-effective option - curbside pickup.
When you pull up, they put it in the car and you're
gone. That's a big weapon.
While this is an option at Whole Foods stores ,
customers need to wait for regular Amazon.com
purchases to be delivered.
In July, Prosper Analytics found that 62 percent of
adults are shopping in stores less.
So as the pandemic pushes so many online for their
shopping, Walmart's name recognition with older
shoppers is also a plus.
My parents, as an example, they're not the most robust
online shoppers, but when this pandemic hit like they
had no choice. But they've been to a Walmart before.
When forced to purchase things online, you're going to
go with who you know and who you trust.
Walmart hired 200,000 employees during the pandemic to
help clean stores and keep items in stock.
It's giving a third round of bonuses to hourly
employees working during the pandemic for a total of
1.1 billion dollars in bonuses this year while facing
backlash for sick and dying workers.
Now, for the first time in 30 years, Walmart will be
closed on Thanksgiving Day.
It's also cutting some corporate roles as it merges
its online and store businesses.
Amazon meanwhile, postponed its annual Prime Day event
that usually sets sales records in July.
It offered one-time bonuses to front-line workers
totaling 500 million dollars and gave workers a two
dollar-per-hour raise from March to May.
It hired 175,000 workers to keep up with demand during
the pandemic, but faced backlash for keeping all its
warehouses operational despite worker deaths.
Still in the second quarter of 2012, Amazon's
first-party sales were up 48 percent year-over-year,
with third-party sales up 52 percent.
Walmart's online sales rose 74 percent in the first
quarter of 2020. I mean, you could argue during the
pandemic that Walmart's taken a bit of a lead because
they haven't publicly had the delivery delays, the
product to the consumer delays, that Amazon has had.
When I began reporting on the pandemic in March, I
discovered that Amazon was actually trying to get
shoppers to buy less.
Fewer nonessential orders meant they could focus on
shipping things like hand sanitizer and masks to
hospitals and state agencies.
That's when I decided to give Walmart a try.
My last order on Amazon was back in February, which
was before they had a lot of those shipping delays
that were caused by supply chain issues and such a big
surge in demand. When I stayed home, I decided to get
my groceries from Walmart and they usually came the
same day or the next day.
When I ordered other items on Walmart.com, they always
arrived within the delivery window and I never had any
delays. In San Francisco, sometimes they even came the
next day. They still don't come anywhere close to
Amazon when it comes to the selection of items that
you can get through online and get to your house
within one or two days.
So I think right now Walmart and Amazon are locked in
a steel cage death match to become the country's
everything store. So what does Walmart have planned as
it continues trying to catch Amazon in e-commerce?
For example, Walmart launched its own voice assistant
called Ask Sam in July for employees to use to help
shoppers find products and prices in stores.
They're trying to find ways to use those physical
stores in new ways.
Not just distribution, but also, you know, they're
talking about medical and financial and edge computing
and all of these other things that really leverage the
stores. For now, the launch of Walmart Plus has
analysts hopeful that one day it could at least
provide a second option for Amazon customers to turn
to. Amazon has set a very high bar, but they've also
given people the playbook to kind of follow.
And then once you figure out how to integrate online
into your stores, there's immense profitability as
well for the brick-and-mortar guys.