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Comments: 272 +- News: Wal-Mart, Amazon Battle For Online Retail's Future on Tuesday November 24, @01:30PM
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kdawson
on Tuesday November 24, @01:30PM
from the bezos-versus-golaith dept.
from the bezos-versus-golaith dept.
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Hugh Pickens writes "The NY Times reports that Amazon and Wal-Mart are waging a price war for the future of online retailing that is spreading through product areas like books, movies, toys, and electronics. The tussle began last month over which company had the lowest prices on the most anticipated new books and DVDs this fall, but has now spread to select video game consoles, mobile phones, even to the humble Easy-Bake Oven. 'It's not about the prices of books and movies anymore. There is a bigger battle being fought,' said Fiona Dias, executive vice president at GSI Commerce, which manages the Web sites of large retailers. 'The price-sniping by Wal-Mart is part of a greater strategic plan. They are just not going to cede their business to Amazon.' Wal-Mart, with $405 billion in sales last year, dominates by offering affordable prices to Middle America in its 4,000 stores, while Amazon, with $20 billion in sales, caters mostly to affluent urbanites who would rather not push around a cart. But Amazon is expanding its slice of the retail pie at an alarming rate — its sales shot up 28 percent in the third quarter of this year; and sales in Amazon's electronics and general merchandise business are up 44 percent. 'We have to put our foot down and refuse to let them grow more powerful,' says Dias. 'I applaud Wal-Mart. It's about time multichannel retailers stood up and refused to let their business go away.'"
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Re: Products (Score:5, Informative)
Last Wednesday, Wal-Mart dropped the price of the oven to $17, from $28, as part of its "Black Friday" deals. Later the same day, Amazon cut its price, which had also been $28, to $18.
Well, color me confused, I see it as $18 on both Walmart's [walmart.com] and Amazon's [amazon.com] site.
It began last month with what appeared to be a public-relations-oriented competition on book prices, with both companies (along with Target, based in Minneapolis) dropping prices on books like "Under the Dome," by Stephen King, to below $9.
What? Walmart: $14.49 [walmart.com] Amazon: $14.50 [amazon.com]
Don't get me wrong, this is great news for consumers but I think you're just seeing preperation for a Black Friday feeding frenzy and not actual 'price wars.'
'I applaud Wal-Mart. It's about time multichannel retailers stood up and refused to let their business go away.'
Wal-Mart stays away from heavily populated areas and makes most of its bank from the heartland anyway. I actually see this as Wal-Mart trying to steal a piece of the online pie if it isn't just a little bit of good ole capitalistic competition. If you think Wal-Mart's been losing business, their stock sure isn't showing it [google.com].
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What? Walmart: $14.49 [walmart.com] Amazon: $14.50 [amazon.com]
The cited prices applied at the book's release. They've gone up in the intervening month.
Re: Products (Score:5, Informative)
You think that's bad? Try being in Canada. It's like a whole other country. ;) For most stores, the online policy is "you should order lube too, because Customs is going to ream you with a cheese grater".
Add 12% tax, $5 customs handling, $45 brokerage, ~$20 shipping, and 6% duty onto just about anything you buy from the US online. Then wait 4-6 weeks for the item to arrive.
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Re: Products (Score:5, Informative)
Ahhh. You must have used UPS. Pretty much everyone I know here (Ontario) avoids them for cross border shipping. They hit you with a tonne of hidden and unexpected charges and I know people who have been burnt really bad by this (ended up paying more than just buying it retail here)
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Re: Products (Score:5, Funny)
I was under the impression that Canadians liked paying taxes.
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Re: Products (Score:4, Funny)
I was under the impression that Canadians liked paying taxes.
Well played, my American friend. :-)
Signed, A Canadian, eh
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Re: Products (Score:4, Informative)
I do a lot of cross-border pickups, both for myself and for work, and can tell you that they do start to care if they see you often enough. They do get a good laugh out of what you would have paid for it here in Canada though.
Getting in is easy, just tell them you're driving across to save yourself the ridiculous shipping and brokerage fees. As for getting out, just tell them where you were, show them the invoice, sign the form, pay the bill and off you go. Bonus points if you drive across with an empty tank and fill up on cheap gas while you're down there.
If you're in or near Winnipeg, Connie's Depot in Walhalla, ND charges $5 (USD or CAD) for small packages and $15 per pallet. There's also a gas station half a block south so you can get the aforementioned cheap gas.
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Re: Products (Score:4, Insightful)
Prices have since changed, so the prices you've found don't reflect historical pricing. As for the "Black Friday feeding frenzy" vs. price wars... those aren't mutually exclusive. Periods of high sales volume are when it's most important to be able to adjust prices relevant to competition -- especially if engaged in a price war to capture volume.
Hah. How many Walmarts are there in NJ, the nation's most densely populated state? Lots. How about the San Francisco Bay area, as another poster pointed out?
At any rate, it is competition. What cracks me up is that someone siding with Walmart is claiming that Amazon is trying to drive B&M shops out of existence, and Walmart must defend B&M retail outlets against the predations of Amazon. Seems to me that Amazon is playing the same game Walmart played that drove all the traditional retailers out of business... giving customers lower prices due to reduced overhead.
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Re: Products (Score:4, Interesting)
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Amazon has one advantage (Score:5, Insightful)
Amazon has one distinct advantage: I will never buy anything from Walmart. That doesn't necessarily mean I will buy it from them instead, but at least I'm more likely to.
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Re:Amazon has one advantage (Score:5, Informative)
You can go ahead and just pay more for the same thing. I don't mind.
Except a lot of times it's not the same thing. Walmart is large enough that they can convince (read: coerce) manufacturers to making Walmart Edition versions of mainstream items. Walmart isn't the first to do this, but IS the first to do this with huge players like Whirlpool and Sony. No doubt this is because the big players can effectively be shut out of the lower middle class market by Walmart marketing the off-brands. It's a game of join the devil or die. I laugh when I see a Walmart commercial with the "Same Brands, Better Prices" theme. It's somewhat ironic that these companies that so closely guard their brand names to exploit brand recognition to imply quality are willing to undercut themselves just to get shelf space in one of the most powerful retailers in the country.
Now, those retail-specific models? You might have encountered them when trying to comparison shop and the model number you picked up from a Walmart placard cannot be found online or at other shops. Sometimes they differ by minor things: a lesser warranty or using factory-second plastic castings with a little more excess flash or slightly mismatched colors. Sometimes they differ by major things: lower class LCD panel with more permitted dead pixels or appliances with lower MTBF or lower tolerance components. A savings of pennies for a handful of resistors could mean the difference between shipping 50,000 units to Walmart or not.
That said, Amazon does it too, but for a much more customer-positive purpose. "Frustration-Free Packaging" takes manufacturer cooperation and requires them to make stuff for Amazon but it's not about presenting a false economy.
I know which company I'd rather give my money too, even if it happens to be a dollar or two more.
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Re:Amazon has one advantage (Score:4, Interesting)
from your post, I am guessing you have heard about The Man Who Said No to Wal-Mart [fastcompany.com] But it is good to read the whole thing, it is not a one sided, "walmart pushes them to produce lower quality", the end. It is just as often a push to produce at a economical quality level. IE its usually better to buy a lawn mower that lasts half as long, but costs 1/3 as much. In that case it also pushed down the price of the quality products, by forcing them to be more efficient as well.
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Eh.. What about the environmental impact. (Score:4, Insightful)
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This is really the exception and not the rule. A overwhelming majority of the items you buy at Wal-mart are the exactly same as what you would buy at any other retailers. Especially for big purchases you should be researching based on model number and can tell that Wal-Mart is selling a different model. Either way if you refuse to shop at Wal-Mart then only you are losing. Overall, I know I am getting a better price at Walmart just by their revenue statistics. Look at them compared to any other Brick and Mortar retailer and their profit to revenue ratio is going to be the lowest. This means less of my money is going into Wal-Mart shareholder pockets and towards the manufacturer.
The problem is that the same model # from the same manufacturer is not necessarily the same at Wal-Mart as at another retailer. A major magazine (I no longer remember which one) did an article where they compared items sold at Wal-Mart with the same model number from the same manufacturer from Sears and/or J.C. Penney's. The example I remember was a particular model of American Tourister luggage. The model had a "drag" handle and small wheels. On the one from Sears and J.C. Penney's those items were metal,
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So-called? As Jim Hightower points out,
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It's probably not fair to say they were ripping customers off. Wal*Mart's economies of scale allow it to do things a mom-and-pop simply can't do.
However, when my tire went flat on a Fourth of July weekend, it wasn't the mom-and-pop tire stores that were open. It was Wal*Mart.
Stereotypes much? (Score:5, Insightful)
Wal-Mart ... dominates by offering affordable prices to Middle America... while Amazon ... caters mostly to affluent urbanites
Because we all know how there are no Wal-Marts along the East or West Coasts, and those backward "middle Americans" don't have the Internet.
Re:Stereotypes much? (Score:4, Funny)
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I can't tell if you missed the meaning of Middle America meaning Middle Class, or if it was part of your joke.
Either way, I'm sure there ARE more Wal-marts in the middle of the states, since the coasts are mostly made up of Starbucks.
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There's a difference between stereotypes and demographics you know; it isn't as if Amazon goes around saying "Yes it's cheap, but will it get them off their tractors?". It is a fact that Walmart has focused their efforts on rural areas, only very recently moving into major cities agressively. It's also a fact that Amazon's business model works slightly better for urbanites who recieve shipments faster (in Milwaukee shipments would arrive in 2-3 days with free shipping, rural Iowa it's more like 8-10 days)
Re:Stereotypes much? (Score:5, Informative)
The SF bay area and LA had both Walmart and Target long before rural Wisconsin did (even though Target is a MPLS-based company). Come to think of it, so did Chicago. Walmart has never "focused on rural areas", rather, they've set up shop where they believe they'll make the most money. Urban/rural has nothing to do with it.
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Re: (Score:3, Interesting)
Wal-Mart ... dominates by offering affordable prices to Middle America... while Amazon ... caters mostly to affluent urbanites
Because we all know how there are no Wal-Marts along the East or West Coasts, and those backward "middle Americans" don't have the Internet.
The words you yourself are quoting literally say "dominates by" and "mostly". Why is it that you can't make perfectly accurate demographic statements without somebody feeling the need to refute claims about "all" and "no" which have never been made? It is a good thing not to attribute a demographic average to every member of the group, but rejecting the average trend itself is just silly, and not insightful at all.
A one minute search on google revealed this paper that shows negative income elasticity fo
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Well, to be fair, the real reason I avoid Wal-Mart (yet strangely continue going to Target and a host of other stores) is that I dislike pushing shopping carts. It also can't possibly have anything to do with having a wider selection online, including higher quality and more durable products.
Dear original post author: if I want clueless stereotypes I know where to find Thomas Friedman.
We all win (Score:5, Insightful)
No way Walmart (Score:5, Insightful)
Amazon Prime (Score:5, Interesting)
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Re:Amazon Prime (Score:4, Insightful)
And they are now trialling $6.99 same day shipping in select cities, order before 11am and have it by the end of the day.
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Re:Amazon Prime (Score:4, Interesting)
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don't forget Amazon Prime. $80/yr for free 2-day shipping? That's a guaranteed money-loser for them..
I would bet that Amazon Prime is one of their biggest profit centers. With proper supply chain management, an Amazon Warehouse is ALWAYS close enough to you for normal ground shipping to only take 2 days. So essentially they are shipping it the cheapest ways possible for probably 90% of their prime shipments, yet they get people to pay "extra" for it. They already have free shipping above $25, which means that they are padding their prices to absorb the shipping costs. The only value Amazon prime
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Welcome to the new economy (Score:5, Insightful)
Remember all those quirky startups? That was a dead end. The new economy is 3 or 4 giant retailers selling everything.
Huzzah!
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A large percentage of my purchases at Amazon are from independent resellers. Ebay, Craigslist, Amazon are great portals for "start ups." The internet has changed the way business is done. If you can't adapt then you die. That's the way it has always worked.
considering the arcane state of tax laws, (Score:5, Insightful)
let alone laws governing what can and cannot be shipped to where it is pretty easy to understand that one of the biggest hurdles of establishing a new business is government.
I code for distribution systems myself and the complexity of where items can go, the taxes on each per locale, and even how they must be transported, are mind boggling. Too many times competition includes fighting local governments who seem to find ways to create fines based on that day's interpretation of a law
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This is a Long Term Fight (Score:4, Insightful)
The problem... (Score:2)
Good? (Score:3, Insightful)
No matter who wins, the money still goes to China.
Walmart has a website? (Score:2, Insightful)
And you can buy stuff on it? brb while I google that.
Wait, WTF? (Score:5, Insightful)
Yes! Down with the Amazon monopoly! Give the underdog with twenty times the annual sales a chance! Preserve competition!
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If you need to take everything into account then Amazon helps the computer vendors, the ISPs and the shipping companies too.
Lovely... (Score:4, Funny)
This is like two pox-ridden whores fighting over which one gets to service the local hockey team. Whoever comes out on top, the only winner is the guy selling condoms, and the only thing certain is that a lot of people are going to get screwed.
purveyors of crap (Score:5, Interesting)
Wal-Mart has been the purveyor of crap for many years now. They push companies close to bankruptcy by insisting that the suppliers' margins be pennies per unit - or they push companies to produce cheaper, crappy Wal-Mart versions of their product with a decent profit margin, but agreeing to do it Wal-Mart's way can ruin your company by tarnishing your reputation. When Joe Sixpack buys your Wal-Mart model TV, your Wal-Mart model computer, or your Wal-Mart lawn mower and the thing turns out to be a piece of crap. Your company's name will be tarnished, and you will get the blame, not Wal-Mart. You might make millions in the short term but over the long term, think about shutting down your company and starting a new one,
Check out the Snapper story (the man who said no to walmart)
http://www.fastcompany.com/magazine/102/open_snapper.html [fastcompany.com]
I shop at Wal-Mart for some things. I don't buy most appliances there though. I buy underwear, DVDs, and personal care items. Electronics, appliances I want to last for more than six months, and other bigger-ticket items I will buy elsewhere.
Re:purveyors of crap (Score:4, Insightful)
Your company's name will be tarnished, and you will get the blame, not Wal-Mart.
I'd say the blame belongs where the customer places it. Brand recognition and loyalty goes both ways, and if a company is going to slap a strong name on a piece of garbage just to get on a Walmart shelf then they deserve the erosion.
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Walmart vs. Amazon (Score:4, Interesting)
Amazon does not really have to compete on price. While at worst people might be agnostic towards Amazon, they hate Walmart.
Very few people are going to dump Amazon merely because the Evil Empire's a little cheaper. Buying is more than merely getting a product. The actual buying is but a small part of a larger service.
It's similar to Newegg. Newegg does not always have the lowest prices. But I know they ship the same day so I'll get it quickly and they'll fix any problems if something goes wrong. So if it's tech related, I almost always buy from Newegg. For nearly everything else, I use Amazon.
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It would eliminate some of the price advantage, but certainly not the logistics advantage. I still shop at Newegg, despite the fact that I pay sales-tax, vs say other vendors like Provantage. Why? because newegg can get it here in ~2 days, while other places like Provantage or GearXS will take a week.