Comment: Amazon or Walmart - a straightforward choice?

According to Andy Bond, writing in The Telegraph today, Amazon will be bigger than Walmart at some point before 2020. This seems, on the face of it, like a glowing endorsement of online shopping when set against the terrestrial alternative (although a cynic might say that Bond would support online, given his position as chairman of Wiggle). But is the choice really that straightforward?

Take a look at Walmart’s numbers for the past couple of years and there has been modest growth. Amazon.com Inc, by contrast, has continued to grow and grow – or at least its sales over the last six months have. Except that when the profit figures for the last quarter at Amazon are scrutinised, they remain very small when set against the sales that the company garnered and they have actually fallen against the same period last year.

Profit is sanity, turnover is vanity. On this reckoning, Amazon looks pretty gaudy currently, while Walmart is reliably sober. But what of the future? Why would you choose to buy from Amazon rather than Walmart? The answer probably lies in-store. Visit any large Walmart and the US and it can be a somewhat soulless affair in the way that sheds tend to be, but the checkouts tick over. And now do the same exercise on your computer in the comfort of your living room and do a little browsing, courtesy of Amazon.

The latter, for many, might be an entirely preferable experience, but not necessarily because Amazon is much better, it’s just that Walmart frequently fails to deliver an environment that makes you feel good about shopping. And there perhaps is the point about what Bond says. Amazon, may indeed overtake Walmart, although whether profit margins will do so remains a moot point, but at that point the game may have been ceded by Walmart, rather than won by Amazon.

For terrestrial retailers, action in-store is needed now if predictions about the rise and rise of the internet are to be prevented from becoming a reality. A good-looking store that offers something more than merchandise in exchange for your time as a shopper will generally trump the sofa and laptop experience, but it will become increasingly hard to ensure that this remains the case and more work will need to be carried out. All of this discounts the investment strategy currently at Amazon, which really does play the long game – a sharp contrast with the ‘what shall we do next week’ mentality that characterises many bricks and mortar players.