Wal-Mart is eyeing Amazon enviously, and trying to step up its game to compete. A Wal-Mart exec told the Wall Street Journal (paywalled; circumvent with Google News) that Wal-Mart was going to be able to match Amazon’s range of products and ability to ship fast “within two years.”
"Wal-Mart was the Internet before the Internet came along," [Wal-Mart global e-commerce CEO Neil] Ashe said. "Value, access, transparency and efficiency are what the Internet asks of companies to survive. And the ethos of our company is very aligned with what customers are asking us to do."
"We don’t have to change what Wal-Mart is, we just have to ask it to it in a different way."
(Which is funny, since the Huffington Post wants to remind you that Amazon is basically just Wal-Mart anyway.)
So, Wal-Mart will be building out more distribution centers so that in two years it will be where Amazon is now. (Does that include an equivalent subscription-for-fast-delivery service to Amazon Prime?) What I want to know is, where will Amazon be then? With programs like seven-day delivery (in some areas), storage lockers, and even (eventually) deliveries by drone, Amazon isn’t standing still for anyone. Amazon may only have about 2/3 the market cap of Wal-Mart now, but then Wal-Mart’s had a lot longer to build it up than Amazon has.
The biggest advantage Wal-Mart has over Amazon is that it has physical stores where people can pick up stuff. Where will it be if Amazon decides it needs to compete on that basis too? On the other hand, once people start having to pay sales tax to Amazon in more locations, Amazon will lose one of its non-physical advantages over Wal-Mart (which has to charge them everywhere since it has stores everywhere).
And if Wal-Mart really wants to compete with Amazon, is it going to start selling e-books? It already sells digital music, and it stopped selling the Amazon Kindle in 2012…
They’ve got their work cut out for them.
“Walmart has been the lowest-rated department or discount store [for customer service] in the nation every year between 2007 through 2012. … During the 2012 holiday season, rival Amazon.com led e-retailers.” — http://www.usatoday.com/story/money/business/2013/03/16/9-retailers-worst-customer-service/1991519/
I don’t expect that the 2013 report will be much different when it comes out.
Were I Wal-Mart, I’d not regard myself as #1 simply because I have lots of retail stores. I’d be like T-Mobile is and see myself as an aggressive upstart. I’d start a different kind of ebook store, taking particular care to differentiate it from Amazon. It would:
* Be standards based, meaning up-to-date ePub.
* Clearly state that, if you buy an ebook, you own it for life and whatever platform you use.
* Have an ebook app for all the major platforms, but also have the APIs to let other ereader apps use it to purchase and display ebooks. People could choose their favorite ereader and still buy from Wal-Mart. They could change their favorite ereader and still read their Wal-Mart ebooks. Nothing proprietary. No walled garden. That’s being different from Amazon.
* Offer a host of nicely formatted public domain texts of classics. A lot of the Kindle freebies look awful.
* Charge no download fees (unlike Amazon) and pay 80% of retail at all price levels. Don’t just have X.99 pricing, have X.49 pricing too at least at the lower prices. Sometimes $1.99 is too much but $1.49 is just right.What’d be $1.99 at Amazon would be $1.49 at Wal-Mart.
* Amazon is run by control freaks. Be very flexible about what authors and publishers can do.
* Let organizations set up stores of their own. Parents, for instance, might want a kid-friendly store without all the ‘my love affair with Big Foot’ trash. Give those organizations a slice of the sales.
* Partner with publisher rather than treat them as prey. Supply them with weekly sales data detailing how many copies of each ebook sold and the location down the the city, state and zip code. Just no names or addresses. That’ll help get the big publishers who need that sort of data on board.
* Find some way that consumers can use the same ereader app for their library checkouts and subscription services as well as for their Wal-Mart purchases.
That’s a start. Amazon is aggressive and risk taking, be even more so. It might help to locate the ebook development team somewhere other than where the rest of Wal-Mart software development is done.
And take note of one of Amazon’s particular weaknesses. Thanks to its market dominance, its ebooks business is extremely lucrative thanks, to a great extent, to the fact that it underpays authors and publishers and gives them no choice in a host of areas. Pay authors and publishers well and give them far more control than a control-obsessed Amazon can tolerate.
Amazon’s most valuable asset is customer service. Walmart will NEVER catch up.
If I were Wal-Mart I wouldn’t announce this. For the people who didn’t think Wal-Mart was that behind the times, it puts doubts in their minds and for the ones who did think Wal-Mart was flailing, it really just confirms it.
Oh, and Amazon is not Wal-Mart. I’ve never known Wal-Mart to be known for good customer service in my lifetime. They’ve always been sub-par. They’ve just been that place you go when you can’t think of other, better stores that might have what you need. Wal-Mart, for one thing, always has like two lanes open, even on the busier shopping days. As a consumer, I really hate that. They also have been quite under-stocked lately. They’re not even close to Amazon and never really have been. I’ve been dealing with Amazon for about ten years now and have never had a problem that I can remember.
The thing about Amazon’s customer service is that it is highly automated, with the CS people working from pre-approved scripts and action plans. That’s not hard to match online, but in store is another matter.
Walmart could match Amazon’s online CS without too much trouble – aside from actually having to hire an adequate amount fo staff. Walmart stores operate with a minimal staff with minimal training. If Walmart wants to compete with Amazon online they’ll need to change that pattern.
I buy from the Walmart website every so often. It’s not bad. The shipping policies and order turnaround time isn’t as good as Amazon, but the rices are about as good and I like that I can return items to a physical store.