Amazon & Wal-Mart: Pinky and The Brain of Retail
In the opening montage of the American animated series, Pinky and The Brain, Pinky asks his best friend, The Brain: “What do you want to do tonight?” To which The Brain replies: “The same thing we do every night; try to take over the world!” Doug McMillon (CEO of Wal-Mart) and Jeff Bezos (CEO of Amazon) personify these lovable characters in their ambition to take over the retail world for better or worse. Last week’s bombshell announcements of online behemoth Amazon’s purchase of Whole Foods and Walmart’s purchase of Bonobos rippled through the retail world, and even caused the stock of certain retailers to plunge, which some business analysts have interpreted to signal the proverbial “white flag” in terms of consumer/investor confidence. As these big-box retailers try to make sense of these momentous deals and the imminent changes to the retail world as they know it, Amazon and Wal-Mart are forging forward in a head to head battle for retail supremacy. If the recent moves from Walmart and Amazon are any indication, the future of retail will be a seamless fusion of online e-commerce and brick-and-mortar retail omnipresence.
For the past decade, Amazon has led an online retail crusade morphing into the country’s biggest online retailer and has crushed the bottom-line of many brick-and-mortar retailers, like Wal-Mart, along the way. But, with Walmart’s purchase of Bonobos and Moosejaw, Wal-Mart has taken a strong foothold in the online retail world to compete on Amazon’s turf. These aggressive moves, aimed squarely at Amazon in an effort to knock it off of its perch, prove that Walmart may well be the only retail giant with enough size, scale and funds to battle Amazon. What both retail giants understand is that shopping is not a monolithic online experience, nor does it operate exclusively in brick-and-mortar shops. And, the whims of modern day consumers call for a versatile shopping experience, whereby consumers can invigorate their senses through an in-store experience one day, and sit in the comforts of their homes perusing online and waiting for their package the next.
Amazon initially explored the grocery business with Amazon Fresh, a grocery delivery service, which did not turn-out as successful as Amazon had hoped due to logistics and economics involved with perishable items. But, given Amazon’s vast institutional knowledge of online e-commerce and its cash cow Amazon Prime, acquiring Whole Foods was a logical and inspired maneuver by Amazon. Not only does this acquisition give Amazon an edge over delivery start-ups such as Instacart and Fresh Direct, but it also provides Amazon with a national platform to compete with Walmart in the grocery arena. Right now, it’s unclear how Amazon will choose to deploy its newest toy. However, with a national footprint on the horizon, one can only speculate that Amazon will likely inject its new darling with an infusion of cash and technological innovation, such as “Amazon Go” which allows consumers to exit the store without checking out.
While Amazon is learning the ropes of retail stores, Walmart’s acquisition of Bonobos will allow it to build expertise in the online universe where it is trying to overtake Amazon. By acquiring Bonobos and various other retail brands, Walmart is corralling established upstart online business that will improve Wal-Mart’s ability to take on Amazon in areas where it lacks expertise and/or inventory. Effectively pairing these online businesses with its existing brick-and-mortar retail stores – whether by incentivizing online shoppers to pick up their items in stores or employing Wal-Mart staff to serve as delivery drivers for online orders - will better position Wal-Mart to break Amazon’s vice grip on the online e-commerce industry.
At one point in time, Amazon and Walmart operated in parallel universes, each reigning supreme in its particular industry. However, a convergence of wills and retail zeal has sparked an impassioned competition for retail dominance between these companies that has the potential of changing the future of retail forever.