December 16, 2012

Amazon Will Bury Walmart

I've never seen the great allure of Walmart. Actually before I moved from NYC to the DC area more than a decade ago, I had never even seen a Walmart--and that was just fine. 

But I had heard these amazing tales of how they were superstores with everything you could ever want and at low prices and the shopping experience was supposed to be, oh what a delight!

So I cannot tell you my utter disappointment the first time I went to Walmart--shabby storefronts, elderly door greeters handing out store circulars and stickers, messy aisles and shelves, with low price tags on a swirling everything, and sort of the image of crummy leftover merchanidse throughout, and top that off with pushing crowds trying to save a couple of bucks on the junk. 

Let's just say, I'm not running back to Walmart, especially when we have online shopping experiences like Amazon--now that is much closer to nirvana. 

No drive, no crowds, no wait, no up and down the aisles looking for what you want, no shlepping, and no in your face "everyday low prices" image and we won't let you forget it--instead easy to find, interesting, varied, and quality merchandise of all types, at reasonable prices, with an easy checkout process, home delivery, free shipping, and easy returns. 

And as opposed to Walmart which is stuck in costly and inconvenient large brick and mortar stores, Amazon is investing in infrastructure of the future with convenient warehouse and delivery centers throughout the country, and more recently with their purchase of Kiva Systems in March 2012 for implementing robotics in their fulfillment centers. 

On top of it, Walmart (with nearly 2.2 million employees worldwide) in its endeavor to keep prices low, have spun up their workforce with jobs--that are often part time and unpredictable, low wage, lacking proper benefits, unsafe working conditions, and with questionable advancement opportunties (especially for women). Throw on top of that bribery allegations for which they've hired a new complaince officer. Yet, Walmart has also somehow managed to keep their workforce from unionizing to improve things. 

So how should we say this: how about straight out--Amazon gets it and Walmart does not!

And while Walmart has their own .com site--which coincidentally looks very much like Amazon's--Amazon is eating Walmart's lunch online, with according to NBC News a 41% revenue increase for Amazon's online sales versus just 3.4% for Walmart's. Moreover, Bloomberg BusinessWeek (29 March 2012) reports that Walmart's 2011 online sales amounted to less than 2% of their U.S. sales--they just can't seem to make the digital transformation!

So While overall Amazon sales at $48 billion are still only about 1/9 of Walmart colossal $419 billion, Amazon with it's high-tech approach (including their successful Kindle eReaders, cloud computing, and more) is anticipated to reach $100 billion in online sales by 2015

Like the other big box retailers of yore, Kmart, Sears, JC Penny, Circuit City, Best Buy, and more, Walmart will decline--it will just take a little longer and with a little more thrashing, because of the size of their checkbooks.  

Perhaps, as the New York Times implied years ago (17 July 2005) only stores like Costco (and throw in Nordstroms as well) with their tall aisles stocked neatly with quality goods, at low prices, and with better human capital ethos, will survive the big box retailer Armageddon.

My prediction is that within a generation Amazon will bury Walmart, if not literally so they are out of business, then figuratively with the best and most lucrative online shopping experience around--and as for the matchup betweent them, it won't even be close.  ;-)

(Source Photo: here with attribution to Fuschia Foot)

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