Can Wal-Mart keep shoppers away from Amazon?

Not even the world's largest retailer is safe as more consumers turn to the Web to buy everything from diapers to televisions.

By TheWeek.com Apr 12, 2012 3:42PM

Walmart © Bloomberg/Getty Images"A mobile shopping revolution is under way, and brick-and-mortar retailers are worried," says Steve Henn at NPR. The phenomenon of "showrooming" -- in which customers go to stores to eyeball and test products before buying them online at a cheaper price, often at Amazon (AMZN) -- is taking its toll on Wal-Mart (WMT), Target (TGT), Best Buy (BBY), and other giants in the retail industry.


Can Wal-Mart fight the trend and cling to its customers?


Wal-Mart can't compete with Amazon's prices: These days, "half of shoppers who buy products online first checked them out in a traditional store," says Ann Zimmerman at The Wall Street Journal. While online purchases only account for about 8% of retail sales, that's up drastically from 2% in 2000.


"Amazon's growth is particularly eye-popping," with Jeff Bezos' company becoming the 13th largest retailer in the U.S. last year, up from 19th the previous year. Remember, Amazon has super-low overhead costs, and doesn't have to collect sales tax in most states, allowing it to offer much cheaper prices. "If brick-and-mortar stores can't compete on price, it is unclear how successful they can be." 


Wal-Mart needs to bolster its online presence: Wal-Mart is "the American retail superpower to rule all superpowers," but it "doesn't have a dynamic presence online," says Vatalyst at Seeking Alpha. "A hefty proportion of the public simply doesn't associate Wal-Mart with online shopping, and therefore use other Internet retailers such as Amazon and eBay (EBAY)." Unless Wal-Mart can "boost its online image, Internet retailers could fast become the new retail superpowers." 


Exclusive products would help: Big-box retailers have to offer "something exclusive that customers can't get anywhere else," says Tom Van Riper at Forbes. "That's how Barnes & Noble (BKS) stayed in business while Amazon was wiping out the rest of the book industry -- coming up with its own e-reader, the Nook, to compete with" Amazon's Kindle.


Maybe Wal-Mart should digitally stalk its customers: "When you shop online, marketers are following your every click," says Henn at NPR. But in the real world, retailers are flying blind. Soon, though, retailers will be able to track smartphones, enabling them to "deliver discounts and coupons based on where people are standing in any particular store." Such gambits, while creepy, could give "retailers who are being showroomed a fighting chance to win back your business before you walk out."


Sources: NPR, Wall Street Journal, Forbes, SeekingAlpha


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5Comments
Apr 12, 2012 5:59PM
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No i buy from Amazon more than Wal-Mart . Who ever has the best price , i go with it . 2/3 of my online shopping is with Amazon , the rest Wal-Mart . When you live in a small town with no choices and high gas prices , they both save me money .
Apr 12, 2012 10:29PM
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I think Amazon.com will overtake Wal-Mart, due to lower expenses, no sales tax, and the convenience of not having to leave home to shop.
Apr 12, 2012 10:05PM
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Recently bought a few books from Walmart.com. The books were cheaper and the shipping was cheaper than amazon.
Apr 12, 2012 5:56PM
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Wal Mart is already cheaper than Amazon even with the tax. Amazon will be taxed soon.
Apr 12, 2012 8:52PM
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SmileHi, who spends most of the money , a middle aged  women , where does most middle aged women shop ,  Wal-Mart !
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