Wal-Mart Company operates many retail stores in different formats all over the world. It also offers its customers products through its web site walmart.com. It was founded in the year 1945 and has its headquarters in Bentonville, Arkansas. Amazon on the other hand, operates as an online retailer mostly in North America and world wide, selling its products through its retail web sites that include; amazon.com, amazon.co.uk, amazon.fr, amazon.de, amazon.cn, amazon.ca and amazon.co.jp. It was started in 1994 with head quarters in Seattle, Washington. This article will look into the ways through which these two companies compete for market supremacy through the variables of the market mix, which dictates the marketing decisions of any business. These fall into four categories commonly known as the 4 P’s of marketing; Product, Price, Place (distribution) and promotion.
Wal-Mart Company offers its customers a wide range of high quality goods. For instance its U.S. segment offers its customers meat, bakery, produce, dairy, produce, deli, frozen foods, dry grocery and floral; household chemicals, health and beauty aids, pet supplies and paper goods; toys, electronics, cameras and supplies, cellular phones, prepaid services, photo processing services and cellular service plan contracts; stationery and books, fabrics and crafts, hardware and paints, automotive accessories, outdoor entertaining, horticulture and accessories, seasonal merchandise and sporting goods; pharmacy and optical services, shoes, apparel and jewelry; and house wares, small appliances and home furnishings. Amazon’s product category include; music, books, movies and games; computers and electronics; digital downloads; kids, toys and baby; home and garden; jewelry, apparel and shoes; beauty and health; grocery; tools, auto and industrial; and sports and outdoors. This clearly shows that Wal-Mart has a larger scope of products as compared to Amazon and therefore has a relatively bigger advantage as concerns the range of products that it provides its customers.
Online price wars between these two companies were more pronounced in 2009. It was common in the similar products they produce like movies, books, electronics and toys. Each company struggled to be the one with the lowest price on the then anticipated new DVDs and books. This spread to video games, phones and even the humble easy-bake oven. But Wal-Mart has managed to out do Amazon in the low price strategy because it has been in this business for long and therefore understands competition. Also its size can’t be matched with that of Amazon. This enables it to have more leverage in negotiating for better terms with its suppliers (Stone & Rosenbloom 2009).
In terms of distribution, the company operates under three segments, the international segment, the Wal-Mart stores segment and the SAM’S Club segment. Wal-Mart is engaged in mass operations of merchandising store that are all over the world. It has super centers, Sam’s clubs and many retail distribution centers all over the world that gives it a larger customer base as compared to Amazon. As at 31st January 2001, the company had 1,736 discount stores, 475 SAM’s Clubs, 888 super centers and 19 neighborhood markets in the US alone. Internationally it is found in the following countries under joint venture agreements; China (11), Puerto Rico (15), Brazil (20), Germany (94), Mexico (499), United Kingdom (241), Canada (174) and Korea (6) (Banks 2001).
This high number of distribution channels enables it reach a big number of customers thereby collecting more revenues as compared to Amazon that relies mostly on its web site in selling its products. The company specializes in web retailing a business venture that is picking up but at a slower rate. The web only serves a few customers mostly the rich who will rather sit at home and order their goods through the web and wait for deliveries than literally visiting a retail center.
In terms of promotion, Amazon with its web sites offers programs which allow its customers to sell own products on their web or customers own branded webs. The company gives developing customers infrastructural technology to develop own businesses. On top of this customers are provided with co-branded credit cards, online advertising which reaches a relatively large audience. On its part, Wal-Mart has also been carrying out massive campaigns for its products through its web, it has been organizing and holding financial workshops that give its customers credit, savings, spending and budgeting tips. This creates financial literacy in its customers winning their confidence in the company (Cook 2009)
Although Amazon appears to have a significant threat to Wal-Mart, it will be long for it to significantly impact on its business operations. Amazon has only been around for about two decades whereas Wal-Mart has been in operation for many fears. Its size and the massive buying power enables it to undercut any competitor that comes along leave alone Amazon. Besides it is also giving its customers services almost similar to those that Amazon is giving. Take for instance the online shopping, both companies are providing it, the only difference is that, while Amazon prefers door to door deliveries, Wal-Mart gives its customers the chance to order online, then visit a nearby retail center and pick the items of your choice.
Both Wal-Mart and Amazon are companies engaged in retail business providing retail services to its customers in a variety of goods and services. There exists a fierce competition between the two, each fighting for market supremacy. Amazon relies on online retailing to serve its customers and Wal-Mart uses retail centers to reach its customers. The many years of experience, and a large customer base gives Wal-Mart an edge over Amazon meaning that for Amazon to catch up, it will still have to work hard for some more years to come.