Here’s why Amazon needs retail stores right now

Amazon’s biggest competitor is chipping away at the e-commerce platform’s dominating connection with consumers.
The post Here’s why Amazon needs retail stores right now appeared first on The Motley Fool Australia. –

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

At first glance, it doesn’t even seem to be a contest. Shares of e-commerce giant Amazon (NASDAQ: AMZN) have not only outperformed those of brick-and-mortar rival Walmart (NYSE: WMT) in recent years, but as of last month — according to numbers crunched by The New York Times — people now spend more at Amazon than at the more traditional retailer. The pandemic’s clearly been a boon for the online “everything store.”

However, if you think it’s just another clear sign that nothing can stand in the way of the Amazon juggernaut, you may be a bit premature in making that conclusion. Walmart has made a small dent in Amazon Prime’s reach by showing respectable growth of its own comparable subscription-based program, Walmart+.

The service may be steering some of Amazon’s current and prospective customers toward the store-centered company. And more of the same could be coming.

32 million and counting

Take the following reported number with at least a small grain of salt, as Walmart has neither confirmed nor denied it. But Deutsche Bank‘s recent estimate that there are 32 million U.S. households subscribed to Walmart+ is probably in the right ballpark. For perspective, Amazon Prime boasts more than 200 million Prime subscribers, although that’s a worldwide figure.

It’s a solid start for Walmart’s subscription service that only launched a year ago, and it doesn’t even include access to a large library of digital entertainment content as Amazon Prime does. Rather, the key selling feature of Walmart+ is unlimited free deliveries of online orders fulfilled by nearby stores — sometimes the very same day — at a Prime-like price of $12.95 per month or $98 per year. It seems to be enough for some consumers, particularly with the offer sweetened by fuel discounts.

The appeal of Walmart+ in a market where Amazon Prime is also available is obvious: speed and convenience, with greater access to perishable foods. Amazon is able to make same-day deliveries in certain markets. But it can’t offer same-day or next-day deliveries of as many high-demand goods that Walmart can thanks to Walmart’s network of more than 5,000 U.S. stores as a means of fulfilling online orders.

A study commissioned by ACI Worldwide and PYMNTS.com quantifies the idea, indicating that ease and convenience are the top concerns for 76% of online grocery shoppers right now, topping risks related to COVID-19. COVID-19 was only a concern for 59% of the 2,342 adults surveyed. Notably, 94% of respondents said they will shop in-store at least some of the time. That’s a detail that gives Walmart a serious leg up on Amazon, which is not a major retailer of groceries or other consumer goods.

Tiptoeing onto Amazon’s turf

There are a couple of additional details buried deeper in Deutsche Bank’s survey results that cast a doubt on just how well Amazon will be able to attract and retain Prime subscribers, who are known to spend at least twice as much on the site as non-Prime consumers do.

One of these nuances is, 86% of Walmart+ subscribers say they’re also Prime members.

That makes sense on the surface. Serious online shoppers likely find paying for both similar services still ultimately pays for itself. Both retailers offer a lot of items, but neither offers everything a consumer may need. If money gets tight, though, consumers may narrow such services down to one. Given the swell of cheap on-demand/streaming services now available, Prime’s content library has never been easier or more affordable to give up.

The other noteworthy nuance of the survey’s results is the type of customers Walmart+ is attracting. These consumers tend to be at the upper end of the income range. Deutsche Bank says 33% of current Walmart+ members live in households earning in excess of $100,000 per year. Only 28% of Prime’s subscribers can say the same.

Simply put, Walmart is making inroads with a crowd that to date has almost exclusively been Amazon’s. Another nicety like access to on-demand content could accelerate this penetration.

Location, location, location

Last month The Wall Street Journal reported that Amazon is mulling the development of its own full-sized store network capable of selling goods like clothing, household goods, and consumer electronics. The company itself has neither confirmed nor denied the Journal‘s suggestion, which was based on comments from unnamed “people familiar with the matter.” But given the early apparent success of Walmart+, a larger store network that looks a bit like Walmart’s might be more of a must-do for Amazon than a want-to.

As it stands now, Amazon manages a few dozen convenience-type and grocery stores, several conventional bookstores, and even more so-called “4-star” stores that feature some of the website’s best-selling items. Don’t forget that Amazon is also now parent to Whole Foods Market, which is a chain of more than 500 North American conventional grocery stores.

That’s still nowhere near Walmart’s geographic reach, however. The big brick-and-mortar retailer’s got more than 5,000 stores doubling as mini-warehouses that it’s leveraging to meet consumers’ desire for a combination of speed, convenience, and local in-store shopping.

Moral of the story: Walmart won’t destroy Amazon, but it could certainly create a brisk headwind for the company.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Here’s why Amazon needs retail stores right now appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of August 16th 2021

More reading

Does your company love its customers?

Here were the most popular US shares for ASX investors last week

Leading broker unmasks 4 top traded international shares

Leading broker reveals why these 10 big-name shares have been firing up its clients

ASX investors were buying Alibaba, Pfizer shares last week

James Brumley has no position in any of the stocks mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.


移动APP平台,拥有 12 个市场的 50,000 多种全球上市证券(全球市值超过 70%),直接在您的 Android 或 iOS 设备上即可操作。

与独有的交易理念和投资分析工具相结合,帮助您在我们 12 个全球市场中的几乎所有金融工具上找到可操作的见解,从而帮助您优化交易策略。





Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!