business news in context, analysis with attitude

The Financial Times has a piece about how Amazon's decision to open Amazon Fresh grocery stores around the country "is an acknowledgment by Amazon that it cannot take serious aim at America’s $1.3 trillion grocery market without the traditional physical retailing it has done so much to disrupt. Amazon’s grocery ambitions will help define the next stage of its more than two-decade battle with Walmart. It comes just as Walmart intensifies its efforts to break Amazon’s dominance of the broader ecommerce market."

The story goes on:  "Sinking billions into ecommerce Amazon and Walmart’s sales have ballooned during the pandemic, making them the world’s two largest public companies in any sector by revenues. Walmart’s remain bigger by a comfortable margin, with net sales last year of $555 billion compared with Amazon’s $386 billion. The crisis has encouraged Walmart to more closely integrate its 5,300 US stores and Sam’s Club warehouse outlets with its web operations."  However, FT points out, "despite sinking billions of dollars into ecommerce — technology is among its biggest areas of capital expenditure, which totaled $10.2 billion in 2020 — Walmart remains a digital underdog. It has just 7 per cent of the US ecommerce market next to Amazon’s 40 per cent, according to eMarketer."

Here's the bottom line:  "It’s competition for top of mind: what is the place you think of when you think, 'I want to buy a soccer ball, I want a dress, I want ground beef',” Janey Whiteside, Walmart’s chief customer officer, tells FT.

You can read the FT piece here.

KC's View:

This is shaping up to be an epic battle, to be sure.  And there is so much that goes into it - the placement of distribution centers to put therm as close to consumers as possible … the embrace of technologies that can cut the time it takes to get orders to shoppers (drones, anyone) … and the strategic/cultural/tactical imperatives that define each company.

In the end, I continue to believe that each company subscribes to a different internal mandate.  Walmart wants to sell more stuff to more people.  Amazon has a more grandiose goal:  to be inextricably intertwined with as many parts of our lives as possible.

But even these mandates are subject to evolution.  Both companies are making health care bets, believing that investing in this sector will help them establish and sustain relationships with shoppers.  And the betting here is that we'll see the same sort of competition play out in the financial services business.

Like I said.  Epic.