Why Amazon's Competitors Can't Keep Up
Followers of the e-commerce industry understand the dynamic between Amazon and its competitors. As Amazon has evolved into a marketing platform and grew its advertising capabilities, the competition also matured. Now, companies like Google, Facebook, and Time Warner Cable have joined in the battle against Amazon. In this post, we’ll explain some of the reasons why Amazon is so far ahead. Continue reading to learn more about why Amazon's competitors can’t keep up.
Competitor Losses Continue
According to CNBC, Walmart has reported losses of more than $1 billion in its U.S. e-commerce sector this year. As a result of these shocking loss reports, Walmart is in a position where it needs to recover one way or another.
Projections for Amazon and Walmart are significantly different and put Walmart far behind Amazon. NASDAQ shares a five-year growth forecast for each company:
AMZN: Annual growth rate of 32.21% over the next five years.
WMT: Annual growth rate of 4.73% over the next five years.
A Difference in Market Share and Product Offerings
Beyond its massive forecasted growth, Amazon continues to grow its ownership of the U.S. online retail market. According to eMarketer, Amazon is on pace to capture almost half of all online retail sales in the U.S. by the end of 2019. Yet, Walmart can only claim about 5% of this market.
And, when it comes to the number of products available on each, Amazon outnumbers Walmart. As of April 2019, Amazon sells more than 119 million products, and Walmart sells about 43 million products as of late 2018. With this said, Amazon is in a much better position from a catalog standpoint.
One-Day Shipping Looks Different for Competitors
The impact of Walmart's jump into one-day shipping is still unknown. For now, most of the products available by Walmart for this feature are those that would otherwise be unprofitable if sold individually. Amazon also faces this issue, but Prime membership fees and its dive into the logistics industry help offset this concern.
Time is on Amazon’s Side
Walmart was founded in the early 1960s, making Amazon about 30 years younger. In this case, the age gap is an advantage to Amazon since for the most part, it avoided costly legacy technology. From the beginning, Amazon was able to focus on the consumer and grow organically. This all ties together in allowing Amazon to offer more products at better prices.
Marketplace Strategy’s Perspective
There is plenty of time for things to change, and Walmart.com is still a core component of many brands’ strategies. This year, Marketplace Strategy (MPS) has been trusted by clients interested in tapping into the Walmart world. We have worked to spearhead these efforts, and it’s helpful to have a hand in both Amazon and Walmart strategies. Using the same strategic partner for both channels allows our clients to have the most streamlined and aligned efforts as possible. We expect the number of our clients interested in putting more resources towards Walmart.com to grow. But, Amazon is still the strongest and most unavoidable channel for brands.
In the past on the MPS blog, we’ve discussed how Amazon isn’t exactly like its competitors. But, that doesn’t stop companies like Walmart from making significant investments and strides to try and reach Amazon’s level. At this point, Walmart needs to make major moves to recover its losses and adapt to trends in consumer behavior. This will put them on a better track to catch up to Amazon. If you believe your brand could benefit from the support of a strategic partner, schedule a free consultation. As always, we’re here to answer any questions.
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