Wal-Mart Slashes Online Prices To Match Amazon...Does It Matter?

Wal-Mart's in-store prices have long been the lowest in the retail industry after decades of building a massive store footprint and subsequently beating vendors into submission.  That said, with brick-and-mortar sales continually being eroded by online sales, pricing dominance against Amazon is becoming far more important than in-store dominance against the likes of Target.

To that end, as Reuters points out today, Wal-Mart is seemingly embracing a new pricing war with Amazon this holiday season and now sports online prices that are nearly on par with the online retailing giant.

Now, the shrinking gap is also becoming noticeable across a broad range of product categories online, according to a price study conducted for Reuters, as well as interviews with pricing experts, retail consultants, vendors and company sources.

 

Prices at Walmart.com are now only 0.3 percent more expensive than Amazon on average, according to the study by retail data analytics firm Market Track, which analyzed prices of 213 products in 11 categories over a period of 700 days ending November 7, 2017.

 

By comparison, Wal-Mart’s online prices were 3 percent higher than Amazon’s on average in the first 350 days ending November 7, 2016, according to the study.

 

In the popular wearables category, which includes fitness trackers and smart watches, Wal-Mart’s prices are 6.4 percent lower than Amazon this year compared to 12.6 percent higher in the same period a year ago. For sports and outdoor products, Wal-Mart is now 1.3 percent lower versus 3.5 percent higher a year ago.

Price Check

Of course, the question remains whether Wal-Mart will be able to maintain consistently lower pricing which is key to boosting sales throughout the year...particularly against a competitor who has repeatedly demonstrated a willingness to lose money in favor of market share gains.

On Cyber Monday, the busiest day of the year for internet shopping, online deals and temporary promotions will overshadow pricing for both retail giants.

 

“We are committed to having online prices that meet or beat prices at other top sites,” said Wal-Mart spokesman Dan Toporek. He said for some items the retailer now displays two prices online to show shoppers when they can get a lower price by picking up their order in a store, but declined to comment further on the company’s pricing strategy.

 

Amazon spokeswoman Kate Scarpa said nothing has changed in the retailer’s approach to delivering low prices to customers.

 

“Amazon’s prices are as low or lower than any other retailer and we work hard for customers to ensure that’s true every day,” she said, declining to comment further on the retailer’s pricing strategy.

So far the lower online pricing strategy is paying off for Wal-Mart, at least in terms of market share gains, but it has come at a cost of over $1 billion in pricing "investments".

Online sales at the world’s largest retailer grew 50 percent year-over-year in the most recent quarter, helping it post its strongest quarterly U.S. revenue growth in nearly a decade. It now accounts for 3.6 percent of total U.S. online sales in the 12 months to October 2017, up from a 2.8 percent share a year ago, according to digital research firm eMarketer.

 

Even with this progress, Wal-Mart has a long way to go. Amazon’s share of the U.S. e-commerce market stands at 43.5 percent. About half of U.S. households are estimated to have Amazon Prime subscriptions, Cowen and Co has predicted, making them less likely to comparison-shop.

 

What is more, the retailer said last year and again this October month that it would slow down the rollout of new stores and divert that capital expenditure towards becoming more competitive online.

 

“Right now the better use of cash is to compete with Amazon and invest that in the business, because if anyone has a fighting chance to stand up to Amazon, it is Wal-Mart,” said Charles Sizemore, the chief investment officer at Sizemore Capital Management, which owns Wal-Mart shares.

Meanwhile, the real question is whether Wal-Mart can match not only Amazon's pricing, but the overall customer experience which has made it dangerously easy to shop online while constantly promising faster and faster delivery times.  As the Financial Times recently pointed out, at wall street doesn't think Wal-Mart has a shot...

...and here's another look at how Amazon's market cap has performed so far in 2017.

So what say you? Is Amazon an unstoppable force in the retail industry or are market gains in 2017 just a reflection of a massive tech bubble?

Comments

Bush Baby Arnold Mon, 11/27/2017 - 09:56 Permalink

Amazon.com is not a retailer, it is a version of Ebay on which retailers sell their wares.Amazon.com does not own the products sold , but Walmart does.Amazon.com does not take a loss on unsold or marked down merchandise, but Walmart does.So the only way Walmart beats Amazon.com is by creating Walmart.com which uses the same business plan as Amazon.com, by passing the majority of the risk and reward to the suppliers.Walmart is probably the only company with the funding and distribution network to compete with Amazon.Battle of the titans

In reply to by Arnold

a Smudge by an… Berspankme Mon, 11/27/2017 - 10:07 Permalink

When I heard what Walmart does to farmers it demoted them heavily in my purchasing. When I realized that Amazon is playing some VERY SHADY and potentially BLACK LETTER ANTI-TRUST and ANTICOMPETITIVE pricing policy it knocked them down heavily too. So I started the holiday shopping season with Ebay. And I'll be looking at Overstock. And thank God for Craigslist to fill the gaps. Not to mention Goodwill which has been the mainstay of my daily wardrobe for lo these many years.

In reply to by Berspankme

bidaskspread a Smudge by an… Mon, 11/27/2017 - 10:42 Permalink

Cyber Monday, black Friday..bah..... best deals I saw were for 11.11. A lot  of these "sellers" on Amazon are just brokers that have warehousing for imports that they slap their logos on from Chinese OEMs. You can get a lot of these products without the logos for a fraction of the cost. Check out gearbeast.com as another ebay alternative.  My bet is FedEx or Ups will partner with these Chinese OEMs to take on Amazon to eliminate the middle man "brokers".

In reply to by a Smudge by an…

Billy the Poet Berspankme Mon, 11/27/2017 - 10:38 Permalink

Walmart.com is already as good as Amz in my opinion. I've been using jet.com. They were recently bought by Walmart. Faster website than walmart.com with a wider range of products. It doesn't have quite the same depth and breadth as Amazon but it's a fairly good knock off. Free shipping over 35 bucks. I've been recieving my packages in 1 to 3 days from purchase.

In reply to by Berspankme

LetThemEatRand Mon, 11/27/2017 - 09:34 Permalink

Pretty hard to feel sorry for Wal-Mart, whose business model was to sell Chinese-sourced crap in a large box in Everytown USA and put all small business competitors out of business while receiving massive tax breaks for "bringing jobs" to the community.  

LetThemEatRand Billy the Poet Mon, 11/27/2017 - 09:38 Permalink

Sure it's possible to find American made goods at Wal-Mart, but "estimates say that Chinese suppliers make up 70-80 percent of Walmart’s merchandise, leaving less than 20 percent for American-made products."http://www.americanmanufacturing.org/press-releases/entry/fact-sheet-wa… are also good that many of the American-made products are "assembled" in America, with parts sourced from China.

In reply to by Billy the Poet

Billy the Poet ParkAveFlasher Mon, 11/27/2017 - 10:07 Permalink

No one is holding a gun to the heads of Walmart suppliers. Prices should drop in a mature and efficient economy.And if Walmart's profit motive is bad then why worry about the profit motive of their suppliers? They can make their own deals.I used to be one of those people who never shopped at Walmart and then I learned that they pay higher wages than other local stores and they have lots of quality US products. While it's true that Walmart does use leverage to get tax breaks many of the horror stories I had heard about them back when I was a Democrat simply aren't true.

In reply to by ParkAveFlasher

Billy the Poet Mon, 11/27/2017 - 09:36 Permalink

I found a better deal on martini glasses at bedbathandbeyond.com than at amazon. Same item is nine bucks cheaper. Will buy the share too which is the same price. Free shipping.

Arnold Billy the Poet Mon, 11/27/2017 - 09:52 Permalink

Jacking the thread a bit.

I read that you were still harvesting your garden.
I did a side by side comparo of Potatoes, Turnip, Rudebega and Sweet Potatoes on Thursday.

Prepared the same, mashed with butter.

When peeling both the Turnip and the Rudebega I caught a faint Horseradish odor which seemed promising.

Turnip was good, a bit different flavor from Potatoe, but very edible.
The Rudebega was too sweet, and the Sweet Potatoe was a diabetics' nightmare.

I've got the Rudebega top sprouting for spring, as well as a Pineapple top,as a companion for my other lonely Pensyltucky Pineapple.

In reply to by Billy the Poet

Billy the Poet Arnold Mon, 11/27/2017 - 10:22 Permalink

I purchased rutabaga and turnip seeds last spring but they never made it into the ground. I've been growing beets, carrots, parsnips and root parsley for a couple of years. All of those overwinter well under glass (except beets)I grow New Jersey sweet potatoes obtained from Baker Creek. They are a good solid, tasty potato that is not too sweet and they store well. I've been taking cuttings in the fall and overwintering them for replanting in the spring. Haven't tried them mashed yet but that's on the menu.Dug up my potato (multiplier) onions this week. Seems like the bunches have not fully separated. Not sure if I should pull them apart as they are, let them season, save them for replanting or just put them back in the bed as they are. 

In reply to by Arnold

a Smudge by an… Billy the Poet Mon, 11/27/2017 - 10:40 Permalink

I have a cabinet full of fancy glasses. Got 'em all at thrift and garage sales but there's tight logic in glassware and such. Snifters are meant to heat the booze in your palm, high stems are for the opposite. Both have convex tops to concentrate aroma. Highball glasses concentrate the booze around ice. Tumblers do the same but reduce the size so the booze doesn't dilute all to hell before you finish it. And shots aren't properly shots without a shot glass. Mason jars and white lightning go together like you and your second cousin behind the wood pile. Pint glasses only incidentally make good weapons.Every booze made in this era is paired with a particular glass that enhances the appreciation and ejoyment of the booze. It's all about the time honored adoration of booze. There's nothing faggy or elitist about it.....when you live in a rabid consumer society that cyclically manufactures, discards and remanufactures again. And again and again.

In reply to by Billy the Poet