There’s a battle brewing in the retail sector. It’s been gestating for a long time, and many of us have been traversing the battle lines — perhaps without even thinking about it. The fight was, in some ways, unintended. But that hasn’t stopped it from becoming perhaps the biggest corporate brawl in America — or at least the most consequential for the average consumer.
The fight is between Amazon and Walmart. Now the two big dogs on the block, they’ve been circling each other for some time now, sniffing for an advantage. While one has been around for decades, the other is the relative new kid on the block. Just a handful of years ago, one was merely hawking books on the internet. These days, of course, there are drone deliveries and 3-D printing trucks to contend with.
Having ditched its bookseller image for something greater and grander, Amazon has now become Walmart’s chief rival. Knowing that, both sides are probing for a weakness in the other and planning their next moves.
Amazon CEO Jeff Bezos seems to know exactly what he wants to do. He’s taking a gamble. And he’s betting American consumers can be sorted into two basic camps: people who shop at Walmart and people who shop via Amazon.
Next: So which are you?
You’re either a Walmart person or an Amazon person
Walmart and Amazon both offer the same basic service and products. They just do it in drastically different ways. Take a trip to your local Walmart, and you’re bound to have a bit of an adventure. It’s not necessarily always a negative experience, but it requires more effort than logging onto Amazon and clicking a couple of icons.
The thing is there are a lot of people who really, really like Walmart. They love that the store is big, has everything they need, and above all, is inexpensive. You can’t blame anybody for liking that — low prices are really what made Walmart what it is today.
Amazon, though, definitely has a different vibe. There are no brick-and-mortar locations (though it’s experimenting with some store models), so you don’t even need to put on pants to do your shopping. It’s a wildly different experience, and a lot of people are still uncomfortable with it. They’d rather just get in their cars and go to Walmart. Again, that’s understandable.
But the difference goes beyond simple consumer sentiment and shopping preferences. The Amazon-Walmart melee is being fought along cultural lines as much as it is others.
Next: The divide
The cultural divide
Yes, there’s a cultural element to the equation. Bezos knows this. Walmart’s C-suite knows it. And they’re pitting each side against the other. There are a lot of people who won’t shop at Walmart for one reason or another. They don’t think of themselves as Walmart people, if that’s a thing. They’re chic. Urban. Sophisticated. They have their groceries delivered for God’s sake.
On the flip side, there are people who swear by Walmart. They hate the snooty pretentiousness of the other side (justifiably so in many cases) and will shop at Walton family establishments until the day they die. There is some overlap in these two camps, but it’s not evenly distributed. Many Walmart shoppers will make purchases from Amazon, but there are many more Amazon shoppers who would probably never set foot in a Walmart, for example.
Next: We see the two butting heads all over the corporate landscape, too.
Consumers aren’t usually worried about corporate and cultural scuffles when it times to buy groceries. They just want the most bang for their buck. That’s exactly where Amazon is trying to undercut Walmart. Let’s break it down to main areas in which the two companies are directly competing against each other:
- Prices: How do the two compare? It’s hard to say overall, but comparisons point in Walmart’s favor.
- Shipping: Amazon has the edge here with its free shipping through Prime, but Walmart is catching on. It recently purchased Jet.com precisely to beef up its e-commerce operations.
- Selection: Again, Amazon gets the edge. It has everything. Walmart, in a traditional shopping sense, is limited to what it can fit in the store. Yes, you can order online, but if you’re going online, you’re already on Amazon’s turf. Advantage: Amazon.
The competition gets even more intricate, though. And Bezos’ gamble becomes increasingly clear now that his company has pulled the trigger on Whole Foods.
Next: Food fight
Amazon purchases Whole Foods
Nothing really shows how serious Amazon’s gamble is like its acquisition of Whole Foods. And it really brings us to the core of our thesis — that the world can be divided into Walmart and Amazon loyalists. Whole Foods, even though it’s just a grocery store, tends to be a sort of cultural lighting rod. Shopping there brings with it a sort of smugness (for some), while others wouldn’t dare set foot in there for fear of being associated with the brand’s “conscious capitalism” schtick. That is basically the total opposite of Walmart.
But groceries is yet another area in which Amazon is taking on Walmart. With the Whole Foods acquisition, another line has been drawn. Are you going to go buy your groceries at Walmart and support a company with a long history of abusive practices? Or are you going to be a Bezos-Whole Foods loyalist, and buy “real food”?
Of course, you can always just keep going to Safeway, too.
You can go to Walmart, and buy a bunch of groceries for, say, $50. Or you can go to Whole Foods, and walk out with some artisan cheese, a poke bowl, and a bottle of kombucha for the same price. That’s the stereotype anyway. There’s a reason they call it “Whole Paycheck,” after all.
Next: As we know, however, things are rarely ever so black and white.
It’s not all black and white
Let’s say our theory holds true, and Bezos truly is trying to divvy up the world into Walmart or Amazon shoppers. This would mean those who hold unfavorable views against the Walton clan are going to avoid it because of the company’s checkered past. You’ve heard the accusations — the anti-labor practices, the union busting, the low-wages. Walmart’s been plagued by bad PR for decades now.
But Amazon’s taken its licks, too, and is by no means perfect. Bezos might have created a retail empire seemingly out of thin air, but his company has also been subjected to attacks for its corporate culture. And, as with any big company, there are myriad other underlying issues. But Amazon hasn’t been around as long as Walmart and still has a relatively clean image.
The key, though, is choosing Amazon (or another retailer) over Walmart typically comes with a “holier than thou” attitude. While the shots people take against Walmart are often justified, it’s important to remember both companies have their problems. And we can see how Walmart’s detractors, such as Amazon, are weaponizing that sentiment against it. Amazon might as well just say, “Shop using our app. We’ll give you free shipping, and best of all, we’re not Walmart.”
Amazon’s gambit: Will it pay off?
It’s hard to say whether our theory will hold true and Bezos will successfully drive the retail sector into two camps. It’s a big world out there — one that has plenty of room for both Amazon and Walmart (and a host of others). But these two companies will continue to size each other up and bring the fight to new arenas — such as groceries, as we’ve seen recently.
There’s no guarantee Bezos’ bet on Whole Foods will pay off, though. Amazon’s already played the part of Icarus by flying a little too close to the sun. Just look at its attempt at a smartphone, for example. It’s not like Bezos and company don’t know failure. But they take risks. That’s how we ended up with Amazon Prime, Amazon Video, and the Amazon Dash button.
Not everything Bezos does pans out, but he has a history of success. And going punch for punch with him and his huge amount of resources (that should only continue to grow) might lead to a battle of attrition. Then again, Walmart is a giant in its own right and won’t go quietly.
The question for consumers is whether you’re going to play your part and pick a side.