Walmart vs. Amazon: Marketing Strategy, Business Models, and Initiatives
HBR Case Study: Walmart vs. Amazon
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Include each question and then answer the question.
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Some of these questions, like in real business situations do not have clear answers but require you to develop a position and argument that can be defended to defend your position. However, there are answers that are better reasoned than other answers.
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Questions
How do the marketing strategy (target segment, value proposition, and marketing mix) of Amazon online and Walmart Super Stores differ in the US market?
What is the value network and distinctive capabilities underlying each of the business models, Walmart versus Amazon?
Evaluate the initiatives taken by Walmart to meet the omnichannel challenge. How should it evolve in the future?
What are the initiatives taken on by Amazon to develop an omnichannel presence? What challenges does it face in the adoption of an integrated model, especially dealing with groceries?
Case Study: Amazon v. Walmart
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Case Study: Amazon v. Walmart
The two most successful retail companies in the world are Amazon and Walmart. Walmart is considered the world's largest retail company based on generated revenues as indicated by a US$ 567.7 billion reported in the financial year 2021 (Kumar & Mittal, 2023). Amazon, on the other hand, is the world's largest retailer by market capitalization. In the following essay, the business models of the two companies are examined and compared.
Marketing Strategy
Owing to a difference in business model, Walmart, and Amazon have two different marketing strategies in terms of the target market, value proposition, and marketing mix. Walmart superstores are designed to target budget-conscious customers. To this end, the company has differentiated itself as a low-cost leader offering low-cost items for customers who are keen to minimize their retail spending. Comparatively, Amazon’s target market is technologically savvy consumers who are looking for quick delivery and convenience. To this end, Amazon offers a wide range of products on its platform to ensure that online shoppers have easy access to various retail products.
Notably, Amazon’s value proposition is derived from its ability to offer customers a certain level of convenience, quick delivery, and a wide selection of products. Consequently, the company provides a wide range of items that customers can purchase and receive same-day or next-day delivery. Through its Amazon Prime program, Amazon offers free and quick shopping to loyal members. Comparatively, Walmart's value proposition is the ability to provide affordability and accessibility to the consumer on everyday products. To this end, the company has invested efforts towards making sure that customers can acquire goods and services from its store at discounted prices.
The marketing mix of Amazon heavily leans towards the optimization of digital channels. To this end, the company has made acquired technology intended to enhance customer experience and achieve personalization of the company’s marketing efforts. Though the company had made efforts to create an offline presence, the offline concepts were not successful and were discontinued in 2022. Comparatively, Walmart has both online and offline channels in its marketing mix, with the offline channels being the most dominant. The company focuses on in-store marketing, with its large size allowing it to negotiate with suppliers and provide discounts for its customers.
Value Network and Distinctive Capabilities
Walmart’s business model is based on the ability to manage its supply chain and achieve cost control. To this end, the company’s value network is built upon the company’s supply chain and a network of physical stores. With time, Walmart has built a supply chain made up of many suppliers and logistics partners with whom it can negotiate and offer affordable products for its customers. The company also has a wide network of stores that are strategically located in areas with high population density. The distinctive capabilities of Walmart are its cost control and supply chain. To this end, the company has buil...
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