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Walmart and Amazon | Write My Paper

Walmart and Amazon

Executive Summary

The study report will focus on giving a comprehensive comparative analysis between two leading retail stores Walmart and Amazon. Some of the key things to be considered in the report discussion include the two companies’ demographics, processes, advertising, target consumers, product mix, SWOT analysis and finance. Further, the analysis will identify the companies’ suitable strategies employed and can be relied on for the next years to remain competitive in the market. Also, the report will encompass questions of market mispricing, arising factors that need attention for the companies to gain competitive edge and significance of profitability.

Introduction

Walmart and Amazon stores are the leading global retailers that battle for online shopping customers, convincing them to buy from their websites. When comparing the two companies in terms of investment prospects, Walmart emerges to have an upside perspective considering its stock rate that is three-year low. Whereas, Amazon has a downside perspective due to its wide existing evaluation. Walmart has the potential to advance its reach to more customers through developing an e-commerce network that will result in more returns for every share. Additionally, Walmart is known to make its investors worth as compared to Amazon, which is taken as an important factor in assessing the long-standing productivity of Walmart. Therefore, Walmart has a competitive advantage as a result of its market positioning.

Walmart

Walmart is the leading retail corporation in the United States and worldwide, which operates about 11,500 stores in 27 countries, with 265 million customers visiting each week. In addition to the stores, Walmart has e-commerce websites situated in 11 countries. Walmart is also the largest private company employer, with 2.2 million associates globally (Walmart, 2020). The e-commerce incorporation to Walmart’s commercial model will greatly impact increasing customers number and store sales (New York Times, 2015). According to Fortune Global 500 (2020), Walmart is the leading company in revenues with $524 billion. The company continues to lead in corporate philanthropy, employment opening, and sustainability.

Walmart Mission Statement

Walmart mission and vision statements outline the company’s vital driving principles as it engages in daily business activities. The company’s achievement is associated with its effectiveness in conforming to the mission and vision. Thus, Walmart’s mission statement is “to save people money so they can live better” (Ferguson, 2019).

Walmart Target Consumer

Walmart’s target consumers depend on various criteria such as income, occupation, social class, age, lifestyle, gender, region, density, among others. Regarding the region and density, Walmart targets consumers, both domestic and international, residing in urban and rural areas. Criteria such as age, gender, income, and occupation, Walmart considers individuals of all age categories, both male and female. Walmart services cover all occupation students, middle-level employees in public and private and manual workers. Individuals with low incomes, middle incomes, and high incomes are all covered by the company. Concerning the consumer social class and lifestyle, the lower class, middles, and working-class are considered (Dudovskiy, 2016).

Walmart Geographic Market

With a humble beginning as a discount retailer store, Walmart has pursued globalization opening thousands of stores in the United States and expanding globally. As mentioned earlier, Walmart has approximately 11,500 stores operating under 56 banners in 27 countries. It has enhanced business by developing e-commerce networks that are operational in about 11 countries internationally. The company has over 150 distribution centers with 61,000 trailers, 6,100 trailers, and more than 7,800 drivers that enable smooth business run in different locations.

Walmart Product Mix

Walmart’s company has a variety of products it sells to customers in different regions of the world. The company usually brings to the market products that customers want. Promoting and selling products customers want to market is simpler than attempting to initiate innovation in the market. Walmart company has employed various strategies to assist in selecting the product mix. One of the strategies is that the company offers a wide range of products in every category ranging from hardware, appliances, groceries, entertainment, wellness, and health goods. Walmart always buys in bulk amounts so that they attain economies of scale and discounts. The company ensures a robust association with their suppliers (Corporate Finance Institute, 2020).

Walmart Current Trends

Several key trends are affecting Walmart transformation and remodeling from store to e-commerce. The company is aggressively pushing remodeling of its stores, and it is ambitious to remodel 70 percent of its stores. Management has focused on ensuring future Walmart occupies less space of 8 percent and less cost to operate efficiently. Growth in e-commerce has been powered by internet evolution, high mobile internet users, and improved online portals, which allow simple search and purchase functionality. Walmart has been promoting online sales of its products, but the interest is to see how it can discount in already discounted products. Walmart’s income and sales growth are determined mainly by its capability to expand stores and tap new markets. However, the company can face the threat of self-cannibalization of its own sales figures due to the massive size (Team. 2020).

Walmart Profit/Loss for Three years.

This report will examine the net income/loss of the Walmart company for the years 2018, 2019, and 2020. Walmart’s annual net income/loss for the year 2018 was $10.523 billion, which was 26.38 percent decrease compared to 2017 net income/loss. The annual net income/loss for the year 2019 was $7.179 billion, which was a decline from the income/loss of the year 2018. Finally, the annual net income/loss for the year 2020 was $15.201 billion, which is a 111.74 percent increase from the year 2019 (Macrotrends.net, 2020). Thus, in the years 2018 and 2019, Walmart had a decline in net income/loss but experienced a huge increase in 2020.

The graph below indicates Walmart’s net income/loss for three years (Figure 1).

 

 

 

Figure 1: Walmart’s net Income/Loss for Three Years.

(Source: Macrotrends.net, 2020)

Walmart Core Management Principles

The company’s three core management principles include growth strategy, cost leadership, and sale volume. A growth strategy involves expanding business, tapering new markets, and increasing the number of stores. Cost leadership encompasses a company offering low priced goods to consumers, obtaining supply with low prices, and maintaining a competitive advantage over counterparts. Lastly, the sales volume principle ensures the company offers a huge variety of products, meeting demands of the market, and availability of business every location (Lityan, 2015).

Walmart SWOT Analysis

Strengths

ü  Walmart is a globally recognized company that has the advantage of its brand name. People all over the globe are aware of the brand, which makes it easier to trust the company (Frue, 2020).

ü  The global organizational size of the company is beneficial to its business. The company can employ skilled people from any country (Smithson, 2019).

ü  The company has the ability to produce large scale, enabling it to reach economies of scale. Consequently, the company can produce goods at a lower price as compared to its competitors.

ü  Walmart has a robust network in its global retail stores, making it control and monitor goods efficiently (Smithson, 2019).

Weaknesses

ü  The company experiences a thin profit margin as its low-priced products to dominate the industry cannot allow the company to increase the price for fear of losing people (Haque, 2020).

ü  The company business model can be easily copied, making it to have more competitors that decrease its profit margin.

Opportunities

ü  The economic expansion of developing countries can result in the company’s better sales. Walmart does not have stores in developing countries, which is a knocking opportunity that the company should utilize to increase the future profit margin (Frue, 2020).

Threats

ü  The company is faced with stiff competition as developing countries floods with new retail shops from locally owned companies that provide products with lower prices.

ü  Most of the company products are not organic, which can result in lower customers in the future (Haque, 2020).

 

Walmart Strategies to Remain Competitive

Walmart has employed several strategies that enable them to remain competitive despite the pressures it experiences in the industry. One of the strategies employed by the company is Every Low Day Price (EDLP), where products continue to be at low prices so that consumers have faith in them and develop the notion that product prices will not adjust often. Another strategy employed is Pickup Today, where customers place orders online and have them delivered within four hours in the nearest Walmart location free. The company uses the Online Grocery strategy that enables customers to place an order and have products delivered at home.

Amazon

Amazon is a multinational company that engages in providing online retail shopping services to the customers. The company operates in the business segment like North America, Amazon Web Services, and International. The company sells products such as books, computers, videotapes, home and gardens, music, electronics, and other numerous products (Bloomberg.com, 2020). Amazon operates an e-commerce network in ten countries with no selling localities. Amazon Prime members experienced a 53 percent growth in the year 2019 globally (Cavallo, 2018). Amazon is the second leading company in revenues behind its rival Walmart with $280 billion annual sales (Fortune Global 500, 2019).

Amazon Mission Statement

Amazon’s mission and vision statements have contributed vastly to the company’s success are one of the leading online retailers worldwide. The mission statement of the company presents guidelines and strategic goals in the management of the business. The company mission statement emphasizes on high quality and effective services to customers. According to Gregory (2019), the company’s mission statement is “we strive to offer our customers the lowest possible prices, the best available selection and the utmost convenience.” The mission statement encourages appealing e-commerce networks for customer’s needs satisfaction.

Amazon Target Consumer

Amazon targets consumers with factors such as region, age, gender, occupation, loyalty, lifestyle, and social class. The company’s consumers encompass lower, middle, and upper classes inclined to online shopping and utilizing e-commerce portals. Most of the Amazon targets are consumers who are businessmen or professionals that are busy with occupations or business, and it is easy for them to purchase things online. They opt not to visit physical stores so that they can save money and time as their orders are normally at home. Additionally, consumers might be the ones looking for deals online. Thus, the company portal always has particular days with huge discounts given to the buyers (Bhasin, 2018).

Amazon Geographic Market

Amazon leads the United States e-commerce market and has spread aggressively overseas to increase its market share in the international market. According to O’Brien (2018), Amazon operates in 58 countries with an online population of 1.2 billion internationally. It is the leading e-commerce company in Western Europe, India, and North America. The primary company places are the e-commerce websites which it uses to transact with its consumers. The official company’s websites include Audible.com, Amazon.com, and several sites targeting specific markets. The location allows the company to engage consumers interested to physically assess the goods before buying (Ferguson, 2017).

Amazon Product Mix

Amazon offers a variety of products to its consumers, and through diversification and expansion, Amazon has products that not only for online retail purposes but a variety that satisfies market desires. As mentioned earlier, the company provides services through its e-commerce websites. Amazon’s expansion of product mix to contain customer electronics such as kindle Fire tablet and kindle e-book reader has resulted in enhancement of the company’s marketing mix efficiency in increasing e-commerce market share. Amazon Web Services offers online services for customers, as well as cloud storage. The firm has additional integrated technology incorporated into the purchasing process. For instance, Amazon Dash has a device that allows consumers to buy household products by clicking the button that links to the internet (Ferguson, 2017).

Amazon Current Trends

Amazon has significant challenges with fake reviews and counterfeit products despite being powerful. The company is trying to end the fraudulent reviews by changing program policies and ensuring the authenticity of reviews. The company’s buyer-seller messaging service allows a third-party to contact customers transacted with the retailer directly. The services have caused problems in addition to fake reviews, forcing the company to tighten the service by making it difficult for shoppers to be contacted by sellers. The company’s fulfilled-by-merchant program permits third-party to list merchandise on the company where the seller is fully in charge of shipping, customer service, and warehousing. The program is a liability to the company as it is unable to control messaging and branding. Also, the program allows sellers to sell counterfeit merchandise (Dod, 2020).

Amazon Profit/Loss for Three Years

The report will examine Amazon’s net income for the years 2017, 2018, and 2019. Amazon’s net income for the year 2017 was $3.033 billion, which was 27.92 percent compared to the 2016 net income. The annual net income for the year 2018 was $10.073 billion, an increase of 232.11 percent from the year 2017 net income. Lastly, the annual net income for the year 2019 was $11.588 billion, which is an increase when compared to the previous year 2018 (Mcacrotrends.net, 2020). In general, Amazon has experienced an increase in net income, which is net profit.

The following graph demonstrates the company’s net income from 2017 to 2019 (Figure 2).

Figure 2: Amazon Net Income from 2017 to 2019.

(Source: Macrotrends.net, 2020)

Amazon Core Management Principles

The company’s three core management principles that it relies on include customer obsession, ownership, and invent and simplify. For customer obsession, leaders are expected to work enthusiastically, so that customer trust is earned and kept. Regarding ownership, leaders should be owners by thinking long-term and not sacrificing long-term values over short-term results. Leaders are expected to be innovators and inventors by always discovering ways to simplify (Amazon.com Inc, 2020).

Amazon SWOT Analysis

Strengths

ü  The company has the strongest brand in the industry which is responsible for its business growth as customers have confidence (Frue, 2016)

ü  Amazon has diversified its business operating online retail services, consumer electronics, private-label goods, and cloud-computing services. Diversification of business makes the company a strong competitor.

ü  The company’s technological innovation capability is a benefit to the business, especially when dealing with trends.

Weakness

ü  The company is associated with a simple business model vulnerable to imitation by emerging companies in the industry.

ü  Company has not yet penetrated to developing markets preventing business to benefit from the developing markets (Greenspan, 2019)

ü  Amazon has limited brick-and-mortar presence, which is an impediment to advancing the non-online market.

Opportunities

ü  The company has a chance to tap the developing countries market and increase its market share for competitive advantage (Frue, 2016)

ü  The company can consider developing new partnerships with other companies for the purpose of expanding its global e-commerce market.

Threats

ü  One of the severe threats to the company is stiff competition in the industry from strong companies like Walmart, eBay, Apple, and Google.

ü  Cybercrime is also a threat to the company’s business integrity and security. The company is still tackling fake reviews and counterfeit products, which are results of cybercrime activities (Greenspan, 2019).

 

Amazon Key Strategies for Competitive Advantage

The three strategies that Amazon has employed to remain competitive in the industry despite stiff competition include focusing on the customer, taking risks, and giving workers stake in the company. According to Severson (2017), most firms talk of focusing on customers, but for Amazon, it walks the talk and acts. Customer focus is evident through one of the company’s core management principles, which is customer obsession. The company has listened to the customers and not competitors, which is a propelling factor to get ahead of the market. The company chief executive officer willing to take a risk despite monumental failures has made them discover new revenue opportunities. Lastly, giving the customer a stake in the company has empowered and motivated them to work best.

Winner/Loser

In contrasting Walmart and Amazon online retailer companies, several factors can determine who the winner is and the loser. Some of the several factors that can help determine the winner and loser include market share, company revenues, number of customers’ company owns, profit margin of the company, among other factors. In terms of market, Amazon has its business operating in 58 countries internationally, while Walmart has a business operating in 27 countries worldwide. Amazon has tapped large market due to its advantage of operating business fully on e-commerce networks as Walmart is still remodeling stores upgrading to e-commerce. Regarding the revenues, Walmart is the leading company with $524 billion, followed by the amazon with $280 billion. Therefore, Walmart has an upper hand to lead, as evident in the revenues compared to Amazon.

Unforeseen Possibilities

The online retailing industry has emerging factors that have disrupted the market for existing companies. Companies face stiff competition from the emerging firms due to imitation of the business model that gives competitors an easy time to tackle the existing companies. Another threat that has disrupted the market is the rapid technological evolution through innovation and invention. Companies in the online retailing industry are tasked with changing their technology frequently so that they are not left behind by others in development.

Summary

From the report, Walmart and Amazon are in competition to dominate the online retailing industry, with each company formulating and implementing key strategies that can be used to beat the competitor. While Amazon is pushing to tap the non-online market, Walmart is busy pushing to remodel stores for the e-commerce market mainly to increase market share. The main threat to retailing companies is competition and technology development. Walmart and Amazon are both struggling to ensure they remain competitive through technological innovation and invention.

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Walmart and Amazon | Write My Paper . (2021, December 17). Essay Writing . Retrieved December 04, 2022, from https://www.essay-writing.com/samples/walmart-and-amazon/
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