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Amazon vs. Walmart, And The E-Commerce Opportunity For Manufacturers Coming Out Of The Coronavirus Pandemic


Amazon being “out of stock” is an analogy for the current status of the world.

As the coronavirus is bringing the world’s economy to a screeching halt, many debates related to e-commerce are now being settled: 

“Will consumers ever adopt e-grocery?” Yes.

“Can e-commerce be both a critical growth driver AND a meaningful business?” Yes.

And one of the biggest debates: “Are store-based e-commerce retailers (think Walmart) woefully behind Amazon and doomed to fail?” The resounding answer is: NO!    

For the first time in memory, Amazon, the largest e-commerce retailer, is experiencing an unprecedented surge in online orders, leading to significant delivery delays. The way we integrated Amazon into our lives one month ago, and the relationship we have with that company today, feel like two completely different experiences. 

On the flip side, Walmart, who was only recently viewed as gaining traction in e-commerce, is emerging as the most trusted, reliable retailer in these challenging times. While Amazon has 526 physical retail locations (Whole Foods, Go stores, Books stores, etc.) and 75 fulfillment centers in the US, those are small numbers compared to Walmart’s 4,756 stores and 42 distribution centers (DCs). In a time when tremendous demand for “core essentials” has arisen, Walmart’s massive and efficient network of stores and DCs is leading the charge to get those products into the hands of consumers. And consumers are switching.

On April 5, the Walmart Grocery app became the No. 1 shopping app in the US, surpassing Amazon by 20%, according to app intelligence firm App Annie.  

Consumers are not only switching from other retailers to Walmart, they are switching to Walmart Online. One client I’m working with saw the percentage of their Walmart sales going through their Online Grocery business grow 66% over a 3-week period—to nearly 20% going through online!

What’s behind this shift? We all know that COVID-19 is driving a surge in online business and click & collect services to minimize in-store contact. However, Walmart is winning the battle among online retailers because they are actually in stock and are best able to meet the demands of this unprecedented demand spike.  

How are they doing it?

Well first, they’ve got the e-commerce service available. The urgency behind Walmart’s drive to roll out the Online Grocery service from less than 100 stores 2 years ago, to approximately 3,000 seems almost prescient.

Secondly, they are able to get back in stock very quickly. How? When you have 4,700+ retail locations, you have a tremendous amount of leverage with manufacturers.

Most people don’t know this, but when manufacturers (like the makers of toilet paper) experience a supply constraint issue, the manufacturer goes through an internal exercise of prioritizing which retailers will get their limited amount of inventory (as we’re seeing right now).

Typically, this only happens when some issue has impacted your supply chain (like a product recall). You have to prioritize who is going to get your next traunch of product (and then the second, and third, and so on). Many factors go into this. But the biggest one is who are the most strategic retailers (biggest and fastest-growing). In times like these, it’s not only for the business relationship, it’s also the fastest way to get your products into the hands of the consumers who need it.

Again, Walmart wins.

What are the implications?  

A recent analysis by Bricks Meets Clicks indicated that roughly 30M consumers have tried e-grocery for the first time during the pandemic. During this time of massive consumer adoption of grocery shopping online, Walmart is winning that valuable first trip. There are barriers to trying online grocery: time to make the first list, concerns over payment, trusting the store pickers, etc.

However, those barriers are now barely speed bumps. That said, once you’ve selected a retailer and are “in their ecosystem,” it takes a lot for a consumer to switch to a different retailer. Walmart is winning these first-time shoppers who will likely continue to be WM Online Grocery shoppers going forward.

As manufacturers, this means the paradigm of: “I’ve solved for Amazon, so my e-commerce strategy is set” has to shift. Online Grocery has hit an inflection point with consumers and, while it will not stay at the 20%+ of all grocery post-COVID, it is going to now be a meaningful part of the business. With 10-20% of their business going through e-commerce, manufacturers must pay as much attention to their e-fundamentals as their in-store fundamentals, or risk losing significant share during this consumer shift.

There will be plenty of other debates to be had during and after COVID-19. However, Walmart has shown that Amazon isn’t the only e-commerce game in town.

Executive Business Leader with a strong record of growing divisions & brands, pioneering new business models, developing markets and emerging trade channels, and inspiring teams in Fortune 100 companies to make brave things happen.

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