Why didn't Amazon buy Walmart
US retail: Walmart, Target & Co. are catching up in the corona crisis
"Consumers are trying to reduce their visits to the store and are no longer buying the vegetables in one store and the long-life products in another," says Hunter Williams, retail expert at management consultancy Oliver Wyman. "That is why the big box providers, where you can find everything the family needs, have an advantage." That applies offline as well as online.
Anyone who has invested in their online trade in recent years has benefited most from the crisis: "The stronger the e-commerce providers were before the crisis, the more market share they were able to secure in recent months," says the consultant Williams.
Walmart depends on Ebay for online business
In fact, the big US chains have now set up a functioning e-commerce. However, many customers had not noticed this for a long time. “Target and Walmart have been chasing Amazon for a number of years. Afraid of being ousted by Amazon, they have invested billions in their e-commerce, ”observes Mark Cohen, marketing professor at Columbia University.
However, when they suddenly stayed at home in the spring for fear of a coronavirus infection, older and less internet savvy Americans also used online offers such as Walmart's.
The companies were able to solve the delivery bottlenecks for online orders with the curbside pickup - a mix of ordering online and picking up on the sidewalk in front of the shop. “That was extremely helpful, especially at the beginning of the pandemic, when the slots for deliveries were sometimes booked out for weeks,” says expert Williams.
With this integrated concept, the traditional providers are also attacking Amazon, which can only fall back on its high-priced organic supermarket chain Whole Foods and a few stores under its own brand. "The competition has gotten tougher," observes Williams.
The balance sheet for the large traditional providers has been positive so far: According to its own information, Target has gained ten million new online customers since Corona and almost tripled its digital sales.
Walmart had already left Ebay behind in the US in e-commerce last year and, according to the market research company EMarketer, is now in second place behind Amazon. In 2019, online sales were already at 19 billion dollars. In the second quarter, Walmart doubled its e-commerce revenue year over year.
It fits into the picture that Walmart, together with Microsoft, is offering the US business of the video service Tiktok, which is extremely popular with young people. This is for sale because the Chinese origin of the parent company Bytedance is a thorn in the side of US President Donald Trump.
In addition, this week Walmart unveiled its new membership program Walmart Plus - a direct attack on Amazon's Prime offering. For $ 98 a year, Walmart customers will be able to make their purchases faster and for free in the future. They also get gasoline cheaper.
Direct competitor to Amazon Prime
"The Plus program will help Walmart to retain the new customers they have won as a result of Covid, and also to deepen their relationships with long-term customers," said analyst Charlie O’Shea of the rating agency Moody’s. But he also points out that Amazon has much more to offer with music and video streaming. "It shouldn't be seen as a direct competitor to Amazon Prime."
Retail expert Mark Cohen is also rather skeptical: "It remains to be seen whether you can really be successful with your member model based on the example of Costco or Amazon Prime," says the professor, who worked as a manager in retail for a long time.
Cohen recalls that Walmart tried a subscription model a few years ago, which failed. Despite all the successes in the crisis, Cohen does not believe that the big box providers Amazon can be seriously dangerous. “Amazon runs on a different racetrack,” he is convinced.
In the medium term, in the opinion of the consultant Williams, the price of the products will be decisive. That could help Walmart, but also discounters such as Aldi and Lidl, which are active in the USA.
More: Walmart's offer for Tiktok shows that the retailer is more technological than its reputation
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