The battle between Amazon and Walmart

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Question one
The battle between Amazon and Walmart has lasted for over a decade. It
reached climax at the beginning of 2018 when e-commerce went ballistic. Amazon
realized a huge growth in its total revenue transcending Walmart as the most valuable
global retailer. AT this time, overall retail sales in the US through Amazon was projected
to be about two hundred billion per year (Arnold, et al., 2018, p. 243). Furthermore, it
enjoyed a market share of the online market of about 40%. Amazon experienced
speedy growth attaining a huge market capital. It is clear that business strategies and
models employed by Amazon over the years ultimately yielded positive results.
However, Walmart is not ready to lose the battle. Its management are fashioning a
model to restore its glory at the top of the completion.
Amazon has always been rooted in the technology world. It was established to
explore internet even at the time when technology was still an emerging subject in
business environment. The management has always been interested in creating unique
and variety products for the customers.it started by selling books and steadily
developed to offer other products (Bustillo & Fowler, 2016). Walmart was primarily
established as retail stores. It expanded by setting up its stores in the small towns within
the rural areas. Eventually it was able to set up various distribution centers within the
United States. Later it diversified into e-commerce by introducing an online purchase
site. For us to establish which of these two companies is in a stronger and stable
position, then it is necessarily to keenly analyze some of the recent decision and efforts
they have undertaken to improve their sales.
Both Walmart and Amazon are great business entities with remarkable global
reputation. But Amazon is in stronger position. Amazon enjoys great revenues. It even
purchased Whole Foods for about thirteen point four billion US dollars in2017. This
expressed its clear intention to aggressively diversify into other offline business. This
was after successfully experimenting with Amazon Fresh doing grocery delivery since
2007. This made Amazon to gain favorable statistics on sales of grocery and habits
(Basker, 2017, p. 198). This posed a serious challenge to Walmart who is majorly
relying on the groceries to keep the business going.

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In the next ten years it will not be possible for Amazon to remain on the top spot.
Technically Walmart is in a better position for future success as compared to Amazon.
Walmart had acquired Jet.com at a price of three point three billion US dollars in 2016.
There was growth in their e-commerce revenue. Jet.com provided market to other
retailers without necessarily having its own store. It employed great technology which
provided discount to its customer as per the size order, distance to distribution store
(Chiou, 2018, p. 285). This attracted more customers and increased sales as customers
were saving money when they added more items to their virtual shopping cart. It
attracted particularly urban based young millennial customers. This customer base
made more online purchases often using mobile device. Walmart is exploring areas that
it previously dormant so as competitively compete with Amazon.
Walmart is slowly but steadily advancing in e-commerce market. In 2017 it
acquired Bonobos, an e-commerce giant which focused on high-end apparel for men
with creative distribution mechanisms. Additionally it bought other explicit retailers
namely Moosejaw and Heyneedle. This was in accordance to its resolution to offer high-
end e-commerce services to its customers (Zimmerman, 2019, p. 87). Walmart have
been earnest in looking for avenues for that can help with innovation for their products
to be accessible online. It just a matter of time before they catch up and surpass
Amazon in E-market share.
Walmart realized that Amazon is making advancement towards offline business.
But Walmart is more than ready with their physical stores, which are distributed all over
the nation, to challenge Amazon. Walmart holds fundamental advantage over Amazon
in the sense it is still enjoying its reputation from the brick and motor store (Polacco &
Backes, 2018, p. 92). IT main concern is to harmoniously merge its online arms of
business together with its physical stores. This will help to provide unique services to its
customers.
In September 2017, Walmart collaborated with Google so as to enable its
customers to make online shopping of Walmart products Via Voice shopping from
Google Express and Google Home. It furthered partnered with Uber, Lyft and Dely taxi
companies to do home delivery for customers’ right from the Walmart stores (Kumar, et

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al., 2018, p. 233). It has also launched how its employees can do the home deliveries.
Walmart have placed its self in a prime position for future profits. It is clear that its online
business is going to explode.
Walmart recognize that satisfactory customer service is key for it to regain its
position as the most valuable global retailer. Customers’ needs continue to increase,
this usually comes with a change in their behavior. By testing and learning customers’
expectations in real life is necessarily for improving customers’ experiences (Ives, et al.,
2019, p. 7). Walmart has innovated ways that make it easier to for customers to get
what they are in need of within the shortest time possible.
Great range of products are sold by Walmart. This helps the firm to reach a great
number of the general public. As it a sure thing for them to be in need of at least one or
two of the products being offered for sale. Not only has the firm dealt with groceries but
also electronics and office supplies and also clothing. Its policy of saving money for the
customers will go a long way to keep the business going in the long run. It targeted
client base is those will low income levels (Bustillo & Fowler, 2016, p. 432). The middle
class consumers who are much concerned with the price most likely to shop from
Walmart than from any other store. This gives Walmart lift towards financial freedom
and a great competitive advantage over Amazon.
Walmart bears enormous potential of marketing its merchandise in outstanding
preferred manner. The firm has natured a familial nature with its customers over the
years. This denotes that the business can segment the market and offer customer
tailored products to match the specific demands of consumers in the market. From the
cloud technology to keep historical selling data (Bensinger & Morris, 2017, p. 476).
Once they analyze these data it is able to establish the pattern purchase patterns of the
customers to stock rightly.
Question Two
At the time Walmart was advancing towards online business consumer behaviors
had changed drastically. The penetration of online shopping among consumers varied
across all groups of the product. This had significant impact on the struggling nature of

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Walmart in online business. Its competitor Amazon continued to thrive because of the
completive advantage it had over Walmart. Amazon had well established online
shopping sites than Walmart (Banjo,, 2018, p. 27). Because Walmart initially majored on
its physical stores and did not properly invest on its online business branch. The
following are some of the specific reasons as to why Walmart struggled in online
business for long.
Generally consumers were unwilling to buy goods from online shops before
having a prior information about the good. They needed more specific details about the
product. Like purchase of an electronic good like a television set would require the
customer to visit the nearest store and experience its use. Then they would inquire
more information from the clerk on the usability of the set. Then before making final
decision of whether to make the purchase or not, they will check the price of the
television set and compare with the pricing of other stores from their phone (Mou, et al.,
2018, p. 422). While it was easier for customers who had previously consumed a
product to make the decision of whether to repurchase it or not. This habit made
customers to shop more from the physical stores and less through online. In 2017 the
average number of trips a customer made to the local grocery store was 82. And the
major buyer of Amazon placed an average of six orders within the year.
Preference for online shopping differed among the customers based on their
income levels. High income consumers were more willing to make online purchases,
and also to pay more for the service. Geographical location also affected the trend of
online shopping. Customers in urban and metropolitan areas spent more shopping
online than the customer base at the rural (Shankar, et al., 2016, p. 125). Demographic
composition was also another factor that influenced online purchases, younger people
made more purchases than any other group. There was no large customer base
embrace to Walmart products. Most people did know the value of accessibility that
came with online shopping.
Amazon was charging relatively low prices than Walmart. Consumers conducted
price comparisons. Although this was controversial due to the price fluctuations, many
people so it was more ideal to place an order with the Amazon more than with Walmart

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(Koschmann & Isaac, 2018, p. 373). Amazon had differentiated its services earning it a
competitive advantage over Walmart. This contributed the struggling nature of Walmart.
Walmart majored on a single product line, groceries. While Amazon was dealing
with several products. Diversification assisted Amazon to be more competitive than
Walmart in online business. Unlike Amazon, Walmart did provide a platform for thirty
party small business to market their products. When it finally provided market for other
small online business like ebags.com, it only selected a very small group to use its
website for market and sell their products online. It made smaller profits as compared to
Amazon which allowed several thirty parties users to sale through its website (Kumar, et
al., 2019, p. 93). This helped Amazon to expand its customer base in new areas where
the third party vendors made supplies.
Walmart did not use high-end technology which is fundamental in improving
efficiency of shopping online. For example cloud computing helped with successful
running and management e-commerce recurrent activities, like keeping database,
physical data and servers. Advance technology usually helps to reduce the cost of
running business and improving quality of service delivered. These factors are important
for attracting and managing a large consumer base (Bensinger & Morris, 2017, p. 42).
Usually focusing in technology and customers help with internal innovation. Walmart did
not embrace these factors at the beginning. The repercussion was slow growth in
customer base and low revenue returns. It struggled for long to set up competitive
branch of business in ecommerce.
Question three
Going forward it is necessary for Walmart to identify and designate their general
system of creating value within the business. They need to focus on their customers
tailored needs, configuring their limited resources into delivering unique and quality
product and services for consumption and how to grow their revenue. This will only be
possible after the management critically analyzes its business environment. It has to
collectively take a look into all internal and external factors affecting its operations like

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employees, customer satisfaction and loyalty, supplies, management, technology,
market trends, competitors and the emerging technology (Fulgoni, 2018, p. 146). This
will help Walmart to recognize its strengths, weaknesses, potential opportunities and
prevailing threats to its success. For a very long period of time Walmart has not
changed its business model. The management was more concerned on implementation
of its existing model as opposed to developing a new business model.
The main growth strategy for Walmart should be market penetration. This
strategy involves selling goods or services to the business’s existing current market.
They areas where it has already on-going operations. In order to implement this
rigorous strategy. Walmart needs to sell more goods and services to its current
customers. As a cost leader in the retail market it should offer discounts and offers to its
customers who are buying packages in wholesale of various products. It should
continue to improve its online site to enhance more customer’s access to the products
(Fulgoni, 2018, p. 34). The accessibility of the products will contribute to huge lengths in
contributing to the increase in sale revenues. Strategic objective linked to this this
rigorous strategy is to improve the company’s market share, especially in the retail
markets. It should employ the cost leadership generic strategy to realize low prices for
the customers so as to penetrate the market.
Market development is significant in supporting business growth. This intensive
plan involves selling the existing goods and services of the company to different and
new markets. Using this rigorous strategy Walmart can open new grocery stores in
other countries where it has not established any operations yet. Strategic goal linked to
this linked to this intensive plan is to establish the business in in new markets where
there are less competition (Polacco & Backes, 2018, p. 284). This should also entail
online presence for ecommerce markets. The management should develop a cost
leadership of general economic model that supports the market development plan. The
low prices will attract new customers in the new established markets
Product development. Walmart should use product development plan going
forward to grow the retail business. Although this looks like a minor strategy but it is
effective when diligently implemented. Product development majorly entails developing

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new product varieties to the markets where it has already existing operations. Walmart
should invest in new products, focus investing in sales and marketing. As these are
embedded at the center of retail business. The specific strategic goal attached to this
intensive plan is investing more in research and development (Ives, et al., 2019, p. 356).
To identify which optimal services it should introduce into the market. It should be
careful to only introduce products that are not costly to the consumers but of high
quality.
Diversification. It is important for business to diversify but providing new products
in new markets. In sectors or industries where it has no operations totally. Walmart
should consider participating in new sectors. For example it acquired content delivery
and Technology Company. The specific action that needs to be performed while
undertaking this general plan is growth strategy, it involves actively searching for and
make investments to acquire compatible companies that can be harmoniously be
incorporated into its already existing e-commerce website (Zimmerman, 2019, p. 354).
Further going forward such acquisitions need to be of high-efficiency and cost effective
in operations. This will support the Walmart’s culture of selling products at low prices
every day.
Walmart need to review its everyday low price policy. This policy has expanded
causing the negative price variation. This was mainly caused by constructive input price
discounts obtained from its vendors (Li & Green, 2016, p. 101). Price reductions to
customers cut profits. Setting favorable prices from vendors can produce positive
impact on the business success. At the AR headquarters allocated in Bentonville,
Walmart manager sturdily discussed pricing issue with its supplies. This had mixed
results, some of its vendors appreciated the effort made by Walmart. They were
pleased with the negotiation style of the company. There were continuous flow order

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placement. Walmart grew in stocking size but this did not reflect on their total sales.
There is need to consciously review the pricing policy. Creating a balance so that
customers continue to enjoying the low prices and the business to experience increase
in sales and eventually revenue growth.
Walmart need to capitalize on its constructive human resource customs. Since
the early years of Sam Walton had always kept a close relationship with the employees.
He viewed them as associates. He was taking care of the employees in the best
possible way to the business. They were offered incentives, given internal promotions
and bonuses obtained from the stores profits. It attracted numerous talents to the store.
There is time Walmart was criticize by former employees for offering part-time
employment, low payments and not collaborating with labor unions (Mitchell, 2016, p.
512). Going forward the management must avoid such a mistake. Good human
resource customs boosts employee’s morale in serving the business. Customers will be
more satisfied from the services they are receiving. This will eventually promote
customer loyalty in the long run
Walmart need to be cost conscious in its operations. They need to be concerned
with cost structure dealing with logistics. The process of moving the goods from the
manufacturer warehouses to the homes of the consumers. Every cost in the process
should be considered and accounted for and recorded. The internet has tremendously
changed the accessibility of retailers by the consumers. There is no much changes
experienced in the economics of distribution. It has to take care of the warehouse
storage charges, delivery costs to the consumers and even packing and unpacking
costs. They should carefully choose favorable logistics system. They should establish a
fulfillment center to aid with home delivery process for those who made online
purchases. Construction of a distribution center will go a long way to cutting logistic
costs. They have the ability to handle bulk goods for redistribution to final consumer
(Breidbach, et al., 2017, p. 230). This will help the business to continuously take
beneficial steps to recover the previously lost revenues to Amazon which had
constructed a fulfillment center long ago.

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Amazon had diversified into several products ranging from books, CDS, movies
and recently groceries. This contributed the huge sales and enormous revenue growth.
Walmart has learnt from their competitors. There expansion policy need to be coherent
with the products they are trading. Previously they were determined to locate their
stores in the remote areas where everyone else was avoiding (Breidbach, et al., 2017,
p. 234). Now they need to expand geographically into urban areas. They should offer
national brand products so as attract more customers. They need to further identify
more products that they can retail in the stores. Adopting a retail format which is able to
attract customers with tailored needs.
Use advance technology to boost customer experience and feedback. Nothing
impacts on the business practices more than customer experience and expectations.
The customer should always get value from the goods and services they are
consuming. But this value should much their willingness to pay. Customer scope is
always a strategic choice. There was a period that retailors scanned each other sites to
monitor their prices. There was fluctuations in demands. Walmart should embrace itself
for cyber wars with its competitors. They need to use high end technology to survive the
completion.
Walmart should develop analytical framework based on the economics of
business experience in order to provide a quantitative intuition in to the relationship
between its business model choice and the expected profit significance. The framework
applied by Walmart need to qualitative represent its business model and map that
representation on an analytical model that reckons its sources of advantage over the
near future. The effectiveness of the new model that will be adapted by Walmart will not
only depend on the design but also on the implementation process.
It should consider embracing analytical framework which combines the theory of
index numbers and the production theory. The numbers is able to provide estimates of
the price effects and variance in quantity levels. While the price effect gives an intuition
into the effects of the business model adopted, its choices and how it will influence
profits using inputs and outputs in aspect of change in product range and the new
supply sources (Li & Green, 2016, p. 231). The quantity effects will capture the impact

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of choices which influence profits through input and output prices like determining
whether it should hire more staff or invest in larger stores. Management should
establish the drivers of quantity changes as well as drivers of profit change.
Walmart management has not changed the business over the years. It seems
this model is too old for the emerging business environments. Retaining this business
model and trying different technique of its implementation will serve a great deal in
advancing its revenue growths. They should adopt a model which will fundamentally
give new and action oriented plan to in the current retail market. The importance of the
online market should vividly illustrated in the new model. Showing specific action plan
for building a competitive advantage in that area in the long run. It should adopt
elements of a platform with many sides in addition to the existing merchant.
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