Walmart vs. Amazon; an update


I don't if I am more surprised that Amazon offers 250 million products or that Walmart "only" offers 4.2 million.

The battle between Amazon and Walmart would be a great metaphor (if it were not so real) for the fight for the 21st century consumer. Who will win? Will it be Amazon with its roots in the digital world or Walmart that hails from the land of bricks and mortar. Not since John Henry, that "steel drivin' man" has a battle between past vs. future  been so fierce.

Well, the Captain said to John Henry
"I'm gonna bring my steam drill around
Gonna bring my steam drill out on the job
Gonna whup that steel on down, down, down
Whup that steel on down"

John Henry said to the Captain
(What he say?)
"You can bring your steam drill around
You can bring your steam drill out on the job
I'll beat your steam drill down, down, down
Beat your steam drill down"

Woody Guthrie 

Walmart is John Henry and Amazon is that steam drill and, like John Henry, despite a mighty effort Walmart continues to struggle in going digital. To get a sense of the gap, check out this Motley Fool,  "Wal-Mart vs. Amazon: Shipping Cost Comparison." 

Here is what stuck out to me:

I don't know if I am more surprised that Amazon offers 250 million products or that Walmart "only" offers 4.2 million. That means that Amazon offers more than 60 times as many items as Walmart. I am not sure it makes a difference to the average person but it certainly does to the niche consumer.

A number of years ago, Chris Anderson came out with his book: "The Long Tail: Why the Future of Business Is Selling Less of More." According to the website, "The theory of the Long Tail is that our culture is shifting away from a focus on a relatively small number of "hits"…at the head of the demand curve and  economy is increasingly shifting…  toward a huge number of niches in the tail." These "hits" are highly profitable because they are scarce items with little competition. 

Therefore, according to "Longtail Theory", the number of products Amazon offers makes it more entrenched with the niche consumer and therefore more profitable. 

There are other numbers that interest me. For example, Amazon is available in 185 countries while Walmart is available in 27. In that there are 196 countries in the world, we can figure that Amazon has pretty much saturated the globe.  

Walmart has a long, uphill battle against an opponent who keeps moving. There is, however, some good news for Walmart in all of this. While Amazon has pretty maxed out on countries, Wal-Mart can only grow. The giant can get giant-er. 

Does Walmart need to add more items; it probably does? How many does it need to be a long tail destination? That is something they are going to need to find out. After all, what is Amazon going to do, make it 250 million and one?





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