Compare walmart and amazon's business models and business strategies

BUSINESS PROBLEM-SOLVING CASE Walmart Versus Amazon and the Future of Retail Walmart is the world's largest and most success- ful retailer, with more than $485 billion in 2016 For online shopping, Amazon has some clea advantages. Amazon has created a rec sales and nearly 11,700 stores worldwide, including and highly successful brand in online retailing. The more than 4,600 in the United States. Walmart has company has developed extensive warehousing facili 2.3 million employees and ranks number one on the ties and an extremely efficient distribution network Fortune 500 list of companies. Walmart had such specifically designed for web shopping. Its premium a large and powerful selling machine that it really shipping service, Amazon Prime, provides fast "free didn't have any serious two-day shipping at an affordable fixed annual sub now Today Walmart's greatest threat is Amazon.com, scription price ($99 per year), often considered to be a often called the "Walmart of the Web." Amazon sells weak point for online retailers. According to the Wall not only books but just about everything else people Street Journal, Amazon's shipping costs are lower than want to buy-DVDs, video and music streaming Walmart's, ranging from S3 to $4 per package, while downloads, software, video games, electronics Walmart's online shipping can run $S to $7 per parcel apparel, furniture, food, toys, and jewelry. The com- Shipping costs can make a big difference for a store like pany also produces consumer the Amazon Kindle e-book reader and Tap speakers, and Fire TV streaming media player. No other online retailer can match Amazon's breadth of selection, low prices, and fast, reliable shipping. For many years, Amazon has been the Walmart where popular purchases tend to be low-cos items like S10 packs of underwear. It makes no sense for Walmart to create a duplicate supply chain for e-commerce. Fire tablet, Echo However, Walmart is no pushover. It is an even larger and more recognizable retail brand than Amazon. largest e-commerce retailer with the world's Consumers associate Walmart with the lowest prices largest and most powerful online selling machine Moreover, Amazon has changed the habits and expectations of consumers in ways to which Walmart which Walmart has the flexibility to offer on any given item because of its size. The company can lose money selling a hot product at extremely low margins and expect to make money quantities of other items it sells. Walmart also has a er retailers must adapt. According to Brian on the strength of the large Yarbrough, a retail analyst at Edward Jones i Louis, Amazon and online retailing is probably the biggest disrupter of retail since Walmart itself. the instant gratification of shopping, buying an it significant physical presence, and its stores provide and taking it home immediately as opposed to Walmart was founded as a traditional, offline, physi- cal store in 1962, and that's still what it does best. But when ordering from Amazon. Seventy percent of the it is being forced to compete in e-commerce as well. U.S. population is within five miles of a Walmart store ght years ago, only one-fourth of all Walmart cus according to company management. mers shopped at Amazon.com, according to data Walmart has steadily increased its investment rcher Kantar Retail. Today, however, half ts online business, spending between S1.2 billion of Walmart customers say they've shopped at both retailers. Online competition and the profits to be reaped from e-commerce have become too important S1.5 billion annually in 2015 and the next few years on e-commerce. This includes fulfillment centers and technology and purchases such as $3 billion for Jet.com to secure expertise for delivering the lowest-cost basket of goods online. Walmart.com is now the second- most visited e-commerce site in the United States with Imart's traditional customers-who are pri marily bargain hunters making less than $50,000 per year-are becoming more comfortable using technology. More affluent customers who started million unique visitors per month. Walmart ha structed one of the world's largest private ng at Walmart during the recession are return- ing to Amazon as their finances improve. Amazon has started stocking merchandise categories that Walmart traditionally sold, such as vacuum bags, diapers, and apparel, and its revenue is growing much computing centers, which provides the computing horsepower for Walmart to increase the number items available for sale on Walmart.com from I million three years ago to more than 50 million today. In the spring of 2015 the company opened four new fulfill- faster than Walmart's. In 2016, Amazon had sales of ment centers around the country, each of which is more nearly $136 billion. than 1 million square feet. To further counter Amazon.