Problem Definition:

The key issue that stood out from this case study would be the rising competition between Amazon and Walmart. In the past,
Walmart's biggest competitors would be smaller brick and mortar shops but this trend is starting to disappear as brick and mortar
shops disappear due to not being able to compete. Walmart now finds itself expanding into the ecommerce section which will
ultimately lead them to competing with Amazon for online sales. However, Amazon has realized that customers want not only an
online presence but they want the best of both worlds and instead would prefer an omni style business model that has amenities for
both online and in store customers so amazon is committed to developing a brick and mortar presence. The rise in the importance of
having an omni style business model will lead to the clash between Amazon and Walmart as they both fight for superiority while
providing similar services and pricing.
Perhaps acquiring bulk infrastructure from materials, freighting, supplies, factories, equipment, etc. can become outdated or in the
near future market as technology continues to advance and ambitions of rivals can be persistent. What if owning or possessing this
infrastructure over time become too costly or obsolete? Of course, both companies have phenomenal research & development
sectors, but the consumer has always proven to be the main innovation in the capitalist market. This is with considerations to both
companies having the keen ability to adapt and efficiently provide.
Assumptions and Missing Information:
Both companies have already successfully moved in freighting & grocery spaces, one can’t help but to wonder, what’s next?
Healthcare, vaccinations, tourism, government, etc., seemingly out of bound but very possible if considering the exponential growth
and ambitions of both companies. While both companies are competing in the same industry now is it possible for them to merge or
has there been any related consideration.
Development of Alternatives:
1. Find ways to differentiate yourself/ develop a niche segment that would be hard for your competition to copy.
2. Focus heavily on producing in house brands to sell with strong competitive pricing.
3. Purchasing vertically on the supply chain to offer low prices
4. Collaborating with brick and mortar stores to increase brand recognition
Evaluation of Alternatives:
1. If Amazon or Walmart decided to find a way to differentiate their business from their competitors by implementing a strategy
that focused on specific segments of a market while maintaining their current product portfolio, they can find a way to stand
out compared to their competitor. Since both businesses have strong buying power and competitive pricing, they will need to
find creative ways to gain an edge over their competitor.
2. Focusing on in house brands will help drive down cost for the same good you’re trying to sell which you can offset to the
customer. If your in house brand becomes recognized, this would give you advantage over your competitor since you will be
able to sell a similar product but at a lower cost.
3. Buying factories that develop products for AmazonBasics. If Amazon were to invest in the supply chain of their most
profitable items by being more direct to consumer business plans, this would increase the bottom line and would also be
able to offer lower prices on items that are purchased in high quantities.
4. Increasing brand recognition by collaborating with brick and mortar stores like gas stations and groceries stores to be able to
increase brand reach and allow the consumer to use the products and potentially switch to using AmazonBasics on the daily.
Our Recommendation
The only true recommendation for Walmart & Amazon to continue its market dominance. They can achieve this by continuing
allocating resources towards advertisement, research & development. As consumers' needs, interests, and appeal to various
products or services is constantly changing it is necessary to closely observe the market to capture early movers opportunities.

Amazon:
• The largest online e-commerce company in the United States.
• From the beginning, it only operated the book sales business on the Internet, and now it has expanded to a wide range of other
products.
• The online retailer with the largest variety of goods in the world.
Walmart
• An American worldwide chain company, in terms of turnover, is the world's largest company.
• Mainly involved in offline retail.
• Stores are located in 15 countries around the world, and a variety of business methods.
Case Summary
• Amazon and Wal-Mart are the two most successful retailers in history.
• Lead and be responsible for changing the rules of the game in the retail industry.
• Many retailers went bankrupt after them, and at the same time changed the way suppliers manage relationships with
powerful retailers.
• They are all widely admired although the market currently believes that Amazon has greater potential.
• Since Amazon is online and Wal-Mart is offline, the two did not compete directly because of their differing focus.
• In response to the ever-changing preferences of customers for omni-channel retail, both retailers have been forced to invade
the other’s turf - with Amazon seeking an offline presence (establishing a brick & mortar presence) and Walmart seeking a
substantial online operation (online expansion and ability to leverage its massive physical network).
• Therefore, each step of these two companies towards omni-channel has made them more and more confrontational.
 The Growth of Ecommerce
• In 2017, ecommerce sales worldwide grew to US$2.3 trillion, a 24.8% increase over the previous year, and made up 10.2%
share of the total retail sales (US$22.6 trillion).
• The US had exhibited rapid growth in ecommerce, with the share of online sales in the country’s total retail projected to grow
from 10% in 2017 to around 14% (US$779.5 billion) in 2021.
• Despite its seemingly wide-spread presence, the e-retail penetration differed significantly across product categories, apparel
(around US$328 billion) and groceries (approximately US$1.5 trillion) were two of the largest categories in the US.
Ecommerce for Grocery
• For the consumers shopping online, freshness and quality of the food items as well as prices were paramount, followed by
timely and frequent availability of delivery.
• The low margins, average order size of the industry and the nature of grocery products in addition to consumer price
sensitivity and delivery preferences led to significant economic and logistic challenges for retailers in their efforts to offer an
attractive, but profitable, online proposition.
• The leading grocery retailers in the US had significantly ramped up their investments to provide customers two key online
grocery fulfilment models: the click-and-collect model.
Ecommerce for Apparel
• Unlike groceries, the apparel market’s high profit margins, non-perishable nature, and high value–low volume ratio made it
more conducive for the online model.
• Ecommerce sales of apparel did however present some challenges for retailers, including the inability to provide the
shoppers a tangible experience whereby they could see the colours, touch the fabric, or try the garment for fit, style and
comfort.
• For the retailers, not only did the returns increase the logistic complexity of their online operations, but also added
considerably to the costs incurred. Since 62% of the customers preferred in-store returns, retailers with omni-channel
presence were at an advantage.
Walmart: The Low Cost Leader
• Unlike groceries, the apparel market’s high profit margins, non-perishable nature, and high value–low volume ratio made it
more conducive for the online model.
• Ecommerce sales of apparel did however present some challenges for retailers, including the inability to provide the
shoppers a tangible experience whereby they could see the colours, touch the fabric, or try the garment for fit, style and
comfort.
• For the retailers, not only did the returns increase the logistic complexity of their online operations, but also added
considerably to the costs incurred. Since 62% of the customers preferred in-store returns, retailers with omni-channel
presence were at an advantage.
Private-label Brand Portfolio
• Walmart, known for selling national brands at low prices, increasingly looked at growing its private label
• brands portfolio (especially for apparel and grocery) in order to drive customer loyalty and better margins.
• Having a private brand from a margin mix point of view and product-driven loyalty have become even more
• important than in the past.
• Besides, acquisitions of private brands such as Hayneedle in 2016, and Moosejaw, ShoeBuy, Modcloth and Bonobos in
2017 had helped Walmart expand its range of online apparel and accessories merchandise in order to include fashion, a
category in which the retailer had struggled to make its mark in the past.
Beefing up the Last Mile
• Walmart introduced a variety of online grocery services such as Walmart Pickup that allowed customers to order online
and pick up at one of its stores, or Pickup Today that allowed customers to pick up their online orders at a store within
four hours for free.
• For those customers who preferred home delivery, Walmart rolled out free shipping in two days for orders larger than
US$35, without any membership fees (unlike Amazon Prime).
Building on the Technical Prowess
• In addition to physically remodelling many of its stores - wider aisles, shorter shelving, new signs and flooring,
interactive displays - Walmart recognised technology as a critical enabler for enhancing the customer experience.
• Wal-Mart has developed and innovated various payment programs to provide customers with a seamless experience
across different channels (digital, physical and mobile), and empowered employees by accessing secure digital
solutions.
Amazon: The Everything Store
• Amazon has expanded extensively from a company that sells books online, and its best-selling products now include electronics,
music, toys, groceries, clothing, shoes, electrical appliances, books, etc.
• Amazon’s key decisions and plans had been firmly and consistently driven by a focus on developing long term market leadership
through customer orientation, rather than accruing short-term profitability.
• In order to overcome the real obstacle to greater adoption of the online model is the bottleneck of delivery cost and delivery time,
the company launched a breakthrough service Amazon Prime in 2005.
• Enhance Online Presence
• Amazon Prime
• Private labels
• Fashion editors to develop shopping guides.
Amazon Prime
• Amazon Prime was a fees-based annual subscription program that allowed the members unlimited free two day delivery on a
large number of items.
• In order to boost its share specifically in the grocery and apparel categories, Amazon introduced many prime services that
significantly enhanced customer value.
• Prime redefines the value proposition of the industry by making faster shipping a core customer expectation.
• Shoppers no longer need to place large enough orders to minimize delivery costs.
Private Label Brands
• Amazon’s private label business, with a portfolio of more than 100 brands, its in-house brands covered different price points.
• To establish itself as a fashion brand, the retail giant also hired talent with experience in the fashion industry, advertised on
fashion-centric platforms such as Vogue magazine, sponsored fashion events, offered premium designer names, it enabled
thousands of designers and artists to present their exclusive work on Amazon.
Focus on the Last Mile and Physical Expansion
• Amazon’s ability to grow and drive its share further in product categories like grocery and apparel was contingent upon the
retailers’ extent of control and presence during the last mile of connectivity with its customers.
• Amazon made considerable investments towards developing innovative solutions for pick up, delivery and return of items
services, and establishing a physical footprint in the domain through strategic acquisitions and partnerships with other
players.
Out of Box Services
• In 2000, Amazon introduced a locker system, installing self-service kiosks in public places, such as retail stores and office
buildings, in the big cities in the US, for pick up or return of packages at a time and place convenient to the shoppers.
• Amazon also introduced the concept of Prime Air – a delivery service using drones (unmanned aerial vehicles) in 2013
• Amazon Key was yet another innovative service proposed by the retailer, which enabled Prime members to receive and view
the delivery being made inside their front door, when the customers were not at home.
Brick & Mortar Presence
• Amazon invested heavily towards creating an offline presence through a variety of access points in order to provide shoppers
a physical browsing experience.
• Amazon slashed the prices at Whole Foods by 25-50% on select products to lure customers from the competition, made
Whole Foods products available on its website, and included them in its Prime Now service.
• Amazon also planned to use the Whole Food stores’ parking lots to drive offline cross-selling by parking its treasure trucks
there and by offering merchandise that Whole Food shoppers might be interested in.
• Acquisition of Whole Foods.
• Operating 13 bookstores.
• Amazon Go.
• Campus pick-up points.
• Amazon fresh pick-up points – only two in Seattle in 2017.
• Offering lockers for pickup and returns.
• Partnership with Kohls.
• 40 miniature retail storefronts.
• Launch of treasure trucks.
Problems in Grocery and Apparel E-commerce
In 2017, the e-retail penetration in grocery and apparel in US was quite low at 1-2% and 18-20% respectively. Despite their low online
penetration, apparel (around US$328 billion) and groceries (approximately US$1.5 trillion) were two of the largest categories in the US.
The bulk of grocery sales took place via customers’ weekly trips to physical stores with 97% customers preferred to buy in stores, and
only 18% buying online too.
 Online mode brings many challenges:
• In case of grocery: The low margins and the nature of grocery products in addition to consumer price sensitivity and delivery
preferences. Even if the grocery delivery options have different combinations, order quantities, and fixed delivery fee models,
not all consumers can accept them.
• In case of apparel: Customers were increasingly preferring to buy online, the inability to have a tangible experience whereby
they could see the colours, touch the fabric, or try the garment for fit, style and comfort was a big limitation.
Online Sales of Amazon in US

• Total retail industry size

• Worldwide: USD 22.6 Trillion in 2017
• US: USD 5 Trillion in 2017
• Total ecommerce
• Worldwide: USD 2.3 Trillion in 2017 (10.2%)
• US: USD 0.46 Trillion in 2017 (9%)
• Projected to grow to 14% in 2021
• Retailing industry is predominantly offline.
• While Walmart faces online challenge, Amazon faces
offline challenge
Marketing Strategy
Amazon Walmart
Target Segment
Income Level Medium and High Income people Low, Medium and High income people
• About 12% higher income level • Relatively lower income levels.
• $62,900 for regulars • Average income of $56,482
• $69,300 for prime members
Age 15 to 50 years of age People from all ages
19 – 44 years old: 53% • Above 45 years old: About 60%
Average Age: 37 years • Average Age: 51 years
Value Proposition • Customers can place order online through • Customers can place order online through
website or mobile application website or mobile application
• Convenience of reaching a store by Amazon • Same at neighborhood Walmart superstore
Go Store • Customers have to pick their order from the
• Products are delivered to the customer at last store
mile delivery • Self check out service is provided
• One-click checkout option available • Variety of products available is comparatively
• Variety of products available is very high lower
• Depth of products available is very high • Depth of products available is comparatively
• Product return rate is low lower
• Response time is high • Product return rate is high
• Response time is low
Initiatives • Launch of Locker systems • Launch of “Site to Store” model like Pick up
• Prime Air for drone delivery Today
• Amazon Key • Launch of Online grocery, Grocery delivery
• Opening of Pop up stores , Truck fleet locations
• Acquisition of Jet.com, Parcel
• Acquisition of Whole foods, Amazon Go
Challenges • Launch of Private brands , Personal Shoppers,
Vending machines
• Low growth in Groceries and Apparel for
Online shopping • Walmart Labs and Walmart mobile app , Voice
shopping
• Little understanding of Customer’s
preferences in Groceries and Apparel
sector
• High investment needed for physical
expansion
Evaluation of • • High growth in sales rate in e commerce in 2017
Strategies ( $11.5 bn )
• 75 mn SKUs offered on Website
• Market place was offered on its Website
Future Evolution • • Integrate e-commerce and physical store
infrastructure
• Strong online presence needed to compete with
Amazon and Search engines like Google
• Balance between offline and online stores to
avoid cannibalism
Challenges that Amazon faces in entering the grocery segment?
• Complexities of delivering groceries and high returns in apparel.
• Last mile connectivity is very critical.
• Ambient temperature products
• Chilled products
• Frozen products
• Economics of delivering grocery favors offline retail (low in value high in weight and volume).
• The touch and feel limitations of apparel restricts buying to only standardised accessories.
The Differences in Online Penetration
• Product standardization • Returns
• New product introduction • Quality assessments
• Ease of delivery (packaging issues and in-person delivery) • Shipping and fulfilment cost as a percentage of order
• Product Information value
Books
• The huge collection of books which is possible online is not possible offline
• Buying a book from online is more convenient as there will be reviews and can also see the sample pages
• Offline retailer have to keep multiple titles to meet the requirements of the buyer
• Books sold online are cheaper compared to instore purchases
• Storage of books is not expensive and also are not perishable products which can save stocking costs to the retailer
• Returns could be very less compared to other products which generally do not meet the customer requirements
Apparel
• Product standardization is limited and latest designs in fashion apparel and needs to tried.
• Easy to store and deliver the products
• Limited information is provided of the product online and sometimes customer could be disappointed
• Prices online are lower comparatively
• High number of returns as the buyer might not be happy with the product size, color or quality, as these can not be shown
online and need physical trial.
Groceries
• Product standardization is limited for groceries, and even impossible for some categories.
• Besides quality, even quantity is difficult to assess online.
• Returns are mostly impossible.
• Prices are higher online comparatively
• Delivery costs depends on the basket size.
Value Network and distinctive Capabilities
Technology
• Amazon’s major asset is it’s huge comprehensive customer data and relies a lot on it which attracts many sellers on it’s
platform
• Walmart on the other hand dominate the retail business with assets as real estate holdings.
• IT system at Amazon helps the sellers to have an idea what customers are buying and customize the recommendations
• IT system at Walmart helps Walmart to understand the spending's on the customers and keep the right stock and inventory at
the stores
Suppliers
• Amazon deals with millions of customers whereas the Walmart have to deal with just 1000s of suppliers.
• Bargaining power of the suppliers is very less because of the power of both the companies, however, Amazon have a higher
power as it deals with more number of customers than Walmart.
• Walmart once agreed to partner with suppliers have to store their products in their store which incurs inventory carrying
costs whereas Amazon on the other hand has very less inventory carrying costs.
 • Amazon helps its suppliers to understand the trends on the customer purchases thereby helping the supplier whereas
Walmart helps the suppliers sell their products efficiently
Logistics
• Amazon distribution channels also should serve for last mile logistics whereas Walmart’s distribution channels have to
deliver the products to its store.
• At Amazon, the warehouses are linked to all individual suppliers and also connected to the customers by last mile delivery
operations whereas Walmart’s distribution channels link the warehouses to its suppliers and stores
• The warehouse at Amazon facilitate individual item picking and delivery, which helps Amazon to sell small quantities to a
large number of customers. On the other hand, Walmart , has warehouses that deliver the stocks to the stores located in the
area

Analysis of Amazon’s Integrated Approach

Advantages
• Amazon has a strong and loyal customer base for retails segment in online
• Have great financial capacity to invest into acquisitions, purchasing of technology and assets
• Great logistics capacity including last mile delivery
• Amazon Prime- Provides a great delivery options apart from the other benefits it provides. This causes higher switching costs to
the customers
• Amazon Fresh- Already have loyal customer base with quicker delivery options
Disadvantages
• Less number of physical stores
• Amazon Primes enables customers to place orders for fewer products with no delivery charges
Cultural difference as Amazon was completely into Online sales and has less exposure for offline sales and lacks expertise in it
Analysis of Walmart’s Integrated Approach
Advantages
• Strong presence in Physical stores with wide and loyal customer base
• Strong capabilities in physical store management like inventory, stocking and planning
• Free Delivery without a subscription fee
• Prices of the products are the lowest
• Cross selling in stores
Disadvantages
• Cross selling not possible on online as much as it is offline
• Prices can not be as lower as it is offline
• Inadequate proficiency in Last Mile Delivery

Summary:
• Walmart leads in physical space, but Amazon dominates online
• Both brands have made serious efforts to build out areas where they are lacking
• The brands match each other in innovation step for step
Recommendations:
• Strengthen the distribution network
• Develop unique marketing tactics
• Adapt to different cultural aspects of different markets
• Expand into new regions
• Strengthen value network
 Questions
Evaluate the competitive forces for the retail industry to identify the forces controlling its profitability (e.g., five forces
analysis). Is Walmart positioned for long-term profitability? What changes can Walmart make to increase its competitiveness?

• Walmart positioned for long-term profitability: The main source of competitive advantage for the company is its lower pricing
strategy that continues to drive higher footfall across Walmart stores compared to the rival businesses.
What changes can Walmart make to increase its competitiveness?
• Walmart’s strategic planning must prioritize competition and new entry in the retail industry. Increasing its investment in the
automation of internal business processes, including its supply chain.

Evaluate characteristics of Walmart and its resources to identify whether it has a competitive advantage (e.g., VRIN analysis).
How sustainable is Walmart's competitive advantage? How transferable are Walmart' advantages to new markets?

As VIRN shows, Walmart has at least seven sustainable competitive advantages.

How transferable are Walmart' advantages to new markets?
Take one of them, the brand is a valuable, rare, and difficult-to-imitate resource. To compete against other retailers, Walmart’s
organization uses this brand throughout its operations, and applies it in the value chain to make it easy for consumers to identify
places (brick-and mortar and online) where affordable goods are accessible.

Compare the cost structure and value chain activities of Walmart and Amazon. What are the implications for how Walmart has
traditionally competed and how it will compete in the future?
The value chain for Amazon and Walmart on Collision Course and its situation in the bigger value
arrangement of the industry:

Continuing the advantages of traditional competition methods, through cost leading strategies, continue to expand market share, and
rely on economies of scale to maintain low prices.
Evaluate the initiatives taken by Walmart to meet the omni-channel challenge. How should it evolve in the future?
• Wal-Mart is rapidly developing an omni-channel strategy for digital transformation, and has reached strategic partnerships
with online e-commerce platforms to allow consumers to enjoy a seamless online and offline shopping experience.
• At present, Wal-Mart China is operating a brand new mini program-"Wal-Mart Mini Program", which will bring a wealth of
products and omni-channel services to more consumers in more cities. Wal-Mart Mini Program will locate consumers
through LBS based on the location of consumers. , Provide a variety of retail services in different scenarios. This is an
important measure of Wal-Mart's omni-channel scenario integration.
• In the future, Wal-Mart should integrate with e-commerce to realize business reform and promote diversification of business
formats.
• Initiatives taken by Walmart
o In store experience
▪ Improved physical experience
▪ Enhanced technology
▪ Customer experience
o Improve Online Service (Click and deliver service)
▪ Increase online inventory
▪ Improving marketplace options
▪ Targeting new customer segments online
▪ Improving delivery options
o Improve Online Service (Click and collect service)
▪ Leverage existing infrastructure
▪ Enhance cross-selling opportunities
▪ Offer lower prices as shipping costs are not there
• Since 2015, Walmart, the undisputed leader, has strengthened its e-initiatives, such as an online grocery pickup tower, expanding
its grocery delivery locations, technology, and supplies to support an omnichannel model. Walmart, the undisputed leader, had
limited success in e-commerce between 2000 and 2014
• The acquisition of Jet.com provided access to a growing urban and millennial customer base
• Walmart has improved the last mile by introducing online grocery delivery services such as Walmart Pickup and Pickup His Today
• In 2017, the company offered its online grocery pick-up at more than 1,100 locations
• Walmart has also installed pickup towers near the entrances of many stores that act as vending machines for online nongrocery
orders.
• Acquired New York-based Parcel, a 24/7 technology-based overnight parcel delivery company
• Development of technical skills
• Walmart also introduced a mobile quick return service that simplifies the return process
• Walmart needs to do to evolve in the Future:
• Build the corporate culture to the needs of a growing online ecommerce company
• Prepare e-commerce departments to pull customers away from brick-and-mortar stores
• Abandoned the 'best price of the day' promise in stores in an online environment where the lowest prices can change from
hour to hour

What are the initiatives taken by Amazon to develop an omni-channel presence? What challenges does it face in the adoption
of an integrated model, especially when dealing with groceries and apparel?
The initiatives taken by Amazon to develop an omni-channel presence:
• Launch more branded businesses and provide consumers with reasonable prices.
• Significant investments have been made to develop innovative solutions for pick-up, delivery and return services, and to establish
partnerships through strategic acquisitions and other participants.
• Launched the center locker delivery system and drone delivery service.
• Created an offline state to provide shoppers with a physical browsing experience
Amazon expands its physical storefronts and expands to grocery stores through the acquisition of Whole Foods, and the grocery
system delivered by Amazon Prime Now requires a large amount of investment.
• Amazon launched a concept called Amazon Prime. Amazon has introduced Amazon Prime as an initiative. Amazon Prime is
an analogue to membership discount stores like Costco or Sam's Club. one can invest in a membership and gain advantages.
The assurance of free shipping is the main justification for purchasing Amazon Prime. Pure convenience is Prime. The main
cause of cart abandonment is removed, and a lock is put into place. Amazon is frequently the first and only place that ptime
members go to shop. The restrictions of an online business have hampered sales in two areas, namely grocery and clothing.
Since Prime was introduced in those two categories, sales have skyrocketed.

How does the value network of Walmart’s “store picking” delivery model differ from that of Amazon’s “warehouse picking”
model? What are the advantages of each?
Store Picking
 As a result of the shorter travel distance, the delivery time is shorter. Less capital expense but greater running expense due to
extra expenses for rent, staff, and advertising. It can offer click-and-collect for in-store returns and in-store refunds. prone to
errors and with less operational control. It is advantageous for people who have a wide network of physical stores.
Warehouse picking
Given the great distance between the warehouse and the customer's location, delivery times are longer. Higher capital
expenditures across the board, yet reduced operating costs. Due to the lack of warehouses, click and collect is not an option. A
different return process must be used because returns cannot be made at the warehouse. more operational control lower
likelihood of mistakes. It works with businesses without a sizable physical presence, like Amazon.

In this race towards building an omni-channel presence, how would you handicap the chances of success for the two retailers?
Future difficulties Due to both of their competitors' online and offline presence.
Sales cannibalization between the two rivals may take place. The two corporations' substantial investments may have both short-
and long-term financial repercussions. Both businesses will no longer have a point of differentiation, thus they must now develop
other strategies or value propositions to maintain their dominance.
How one may compete with the opposition.
They ought to make switching as expensive as they can, perhaps by promoting a membership model similar to what Amazon
prime has done in the digital sphere. Since Walmart already has a strong reputation in the real world, marketing efforts should be
focused on the newly entered area, such as the online market.

How does the marketing strategy (target segment, value proposition, and marketing mix) of Amazon online and Walmart
Supercentres differ in the US market?

What is the value network, and distinctive capabilities underlying each of the two business models (Amazon online versus
Walmart Supercentres)?
Amazon Walmart

Amazon Walmart
Strength • Strong brand name and brand valuation. • Strong brand recognition
• Innovative: It has been quick to adapt to customer • Walmart is able to achieve Cost Leadership by
preferences with shifting actions into online retail. offering low prices.
 • Cost leadership: Amazon’s operating costs • Brick and mortar as well as online presence
showed to be less than 2% of Walmart’s operating • Strong power over suppliers
costs, which indicates a significant strength that • Highly functional supply-chain logistics.
gives Amazon more opportunity to grow and take • High variance of goods
more risks in regards to expanding its operations.
• Superior logistics and supply.
• Large infrastructure capable of supporting fast
delivery worldwide
Weakness • Easy to imitate especially by the • Low profit margins
international rivalry like Alibaba and Ebay • E-commerce sales low
• High labor costs
who already have the structured infrastructure
to copy their business module.
• Limited brick and mortar presence
• All online
Opportunity • Expanding physical business stores • Expanding to new market (India)
• Expand in house brand • Partnerships/ alliances
• Expand into international market
Threat • Government regulations • Online competition. The major online threat to
• Theft and security Walmart is Amazon.
• Fake products • Decreasing foot traffic of brick and mortar stores
• Recessions which indicate the necessity to emphasize their
• Instant gratification from brick and mortar stores. online sales.
• It appears that eventually both companies could
become more of a direct threat to one another in
the near future given that Walmart is continuing to
expand its online infrastructure & Amazon has
been putting more resources into establishing
physical infrastructure.
• Worldwide attention and concern over treatment
of workers