Amazon and Walmart compete with each other not only on price

Competition between giants will cause greater fluctuations in the market. For example, during this year's Prime Day, Walmart also joined the competition with Amazon. There were more low-priced goods on the market and the competition became more intense. With the changes in the external environment and the evolution of strategic goals, price is no longer the only competitive factor between Amazon and Walmart.

Amazon and Walmart are two very different companies. Amazon is not just an e-commerce platform, it has also developed a number of services including logistics, cloud services, streaming media, etc., so it is more appropriate to describe it as a technology giant.

In 2016, Walmart acquired the e-commerce platform Jet.com and officially entered the e-commerce market, while also moving its low-price strategy online. In the e-commerce field, Amazon is Walmart's competitor and also an object of imitation. It launched WalmartPlus to compete with Amazon's Prime membership program.

Recently, the New York Times analyzed the competition between the two giants in the field of e-commerce, including the differences in market advantages and target groups. So far, Walmart has fewer product categories than Amazon, but the average price is lower, and its stock price performance is slightly better than Amazon.

Walmart has a price advantage, while Amazon wins by service

Many US retail giants launched corresponding promotions on Prime Day this year. Walmart did not participate last year, but this year it started its Walmart Plus week shopping event one day earlier and lasted for four days. At this time, market demand is weak and warehouse space needs to be freed up for holiday season inventory, so the discounts are generally large.

For retail giants like Amazon and Walmart, it is difficult to build sufficient customer loyalty by low prices alone, and providing additional services is an important means to compete for sellers and users. Today, Amazon has launched AWS, logistics, advertising and other services, and Walmart is also following Amazon's example.

Currently, Amazon's Prime membership program still outperforms Walmart's WalmartPlus overall. Data shows that in June 2022, Amazon had 168 million Prime members in the United States, while Walmart had 11.5 million members.

However, Walmart has more advantages in price and physical store channels. In the current economic downturn, lower prices can attract more customers, while the physical store network can not only help it improve delivery efficiency, but also reduce the return rate, thereby reducing costs.

The report pointed out that until the mid-2010s, Amazon did have a leading advantage in terms of price. But now, many customers go to Amazon to shop for factors other than price, which is also an important factor in Amazon's long-term market dominance.

Amazon and Walmart, target different customers

It is reported that the market strategies of Amazon and Walmart are not exactly the same, and their target customers are also different. Walmart's customers have lower average incomes and are more sensitive to prices, while Amazon's customers are willing to pay higher prices for its additional services and product diversity.

The difference between the two is also reflected in the difference in pricing strategies. According to the research, a study of 238 products sold by both retailers in 2020 and 2021 showed that the average price of Amazon was $14.46 and the average price of Walmart was $8.50.

The reason is that Walmart has a greater degree of control over its suppliers and mainly sells its own products, and it has been implementing a strategy of everyday low prices.

In contrast, Amazon has fewer restrictions on third-party sellers. When Amazon screens "Buy Box" sellers, low prices are not the only evaluation indicator, and multiple sellers in the same category have this mark. According to Amazon, evaluation indicators also include sellers' product ratings and sales time.

In addition, Amazon's third-party sellers adjust their prices more based on price changes of competing brands' goods, rather than other ordinary sellers' prices. This means that price is not the only competitive factor among Amazon sellers. During the epidemic, Amazon also allowed sellers to raise prices for some scarce goods, while Walmart took purchase restrictions.

In general, there is bound to be competition between Amazon and Walmart, but due to the different target markets and customer groups of both parties, direct competition is unlikely. This also reflects to a certain extent that price is an important factor in winning in the market, but it is not the only factor. The first priority is to meet consumer needs to the greatest extent.

Editor✎ Ashley/

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