The future of retail will be a combination of both online e-commerce and a brick-and-mortar retail presence – as recent moves from both Walmart and Amazon have shown, including today’s back-to-back announcements from the two rivals, which sees Amazon buying a chain of popular grocery stores with a Whole Foods deal for $13.7 billion, and Walmart picking up yet another online apparel vendor with Bonobos for $310 million.
Walmart is the only retailer with the size, scale and funds to take on Amazon, and it’s been making aggressive moves to compete with Amazon’s online business for years. Amazon, on the other hand, has been trying to figure out how to merge brick-and-mortar stores into its world of online shopping.
The question is, which retailer will figure out the perfect mix of online and offline, and get there the quickest?
As of late, Walmart been targeting Amazon’s Prime business – launching free, two-day shipping on millions of items, without requiring an annual membership, for example. The move hasn’t been lost on Amazon, which in turn has gone directly after the Walmart shopper, by making it easier for lower-income consumers to pay with cash on its site. It even discounted Prime for those on government assistance, arguing that a Prime membership is not a luxury, but a need.
The truth is, Amazon needs to capture the Walmart shopper as it has saturated the middle to high-end of the market with Prime memberships; approximately 60% of U.S. households now have Prime, with lower-income households the only place it can still grow Prime stateside.
Beyond its Prime cash cow, Amazon has also made moves to better tackle the grocery business – a tough area to compete as an online-only retailer, given the need to keep fresh items cold, and others frozen. Amazon has slowly ramped up in this area over the years via its delivery service AmazonFresh, but it has not been able to widely scale grocery deliveries due to the logistics and economics (or “enormous money pit,” more colloquially) involved with delivering perishable items.
Here, however, Walmart has an advantage. It has stores within 10 miles of 90% of American shoppers, and has quickly expanded its service that lets online customers place orders online to pick up curbside at their nearest store. It’s even trialing drive-up grocery pickup kiosks, to make the process easier.
Amazon, on the other hand, is still a relative newcomer to brick-and-mortar retail, compared with Walmart. Though it just opened its own drive-up grocery pickup service in Seattle, many of its effort in brick-and-mortar feel more experimental.
For example, it’s trying out physical bookstores in major markets around the U.S., which also double as a gadgets showcase as well as a test of using online purchase data to inform…