Is Wal-Mart a better deal than Amazon?

A new study shows the brick-and-mortar retailer has lower prices but the online giant is still winning over customers.

By TheWeek.com Jun 26, 2012 2:30PM

Image: Woman shopping in interior design shop, side view © Alistair Berg/Digital Vision/Getty ImagesBrick-and-mortar retailers have long feared Amazon's (AMZN) cost-cutting abilities. The online retail behemoth does not have to pay for sales staff or maintain vast, warehouse-like stores.


With its ability to reach into your personal computer without physically crossing state borders, the company even avoids adding local sales taxes to its products. Lower costs usually mean cheaper prices, and big-box stores like Best Buy (BBY) are shutting down stores as erstwhile customers flock to Amazon.


However, a new study conducted by research group Kantar Retail shows that Amazon's prices aren't as cheap as everyone thinks they are. In fact, Amazon on average is a whopping 20% more expensive than its top rival, Wal-Mart (WMT). Here, a guide to Kantar's findings.


How was the study conducted?
Kantar compared the prices of 36 brand-name goods offered by both Amazon and a Walmart superstore in New England. Shipping costs were not included, which means that Walmart performed even better than the 20% differential would suggest. Furthermore, Amazon was 13% more expensive than Walmart's online arm, the little-used Walmart.com.


Why is Wal-Mart so much cheaper?
While Amazon is growing at a blistering pace, Walmart still rakes in far more revenue, which gives it greater buying power to negotiate prices. Amazon also often relies on third-party suppliers to sell goods to consumers, which jacks up costs. Walmart is particularly competitive in the grocery category -- a package of Bisquick pancake mix costs only $6.12 at Walmart, compared with a ludicrous $14.52 on Amazon.


What does that mean for Amazon?
It's a sign that Amazon "is slowly losing its pricing advantage," says Paulo Santos at SeekingAlpha. Amazon continues to benefit from lagging perceptions that it's the cheapest deal around, but when consumers catch up, Amazon's "revenue growth will be threatened."


Should Wal-Mart still be worried?
Yes. "Five years ago, only about a quarter of Walmart's customers shopped at Amazon," says David Welch at Bloomberg. "Now half say they do." Customers simply trust that Amazon is going to offer them competitive prices, particularly in the entertainment category, where Amazon has excelled at slashing costs for books, movies, and music. Walmart is now trying to eat into that market, offering deep discounts on DVDs for the first season of "Glee," for example.


Does Amazon enjoy other advantages?
Yes. Kantar found that Amazon was completely in stock for all the products tested, whereas 3% of the items were out of stock at Walmart's physical store. The number rose to 14% at Walmart's online store, which signals a big problem for Walmart, says Kantar. When customers think of online shopping, they immediately think of Amazon -- not Walmart.com.


Sources: Bloomberg, The Huffington PostMarketing Daily, SeekingAlpha


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61Comments
Jun 27, 2012 12:45AM
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While you may believe it is cheaper to shop at Wally World; not having to set foot in that God awful store is PRICELESS!!!
Jun 27, 2012 9:32AM
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just did a check on Amazon, that 14.52 cost for bisquick is for 3 boxes, a single box costs 4.50, well under Walmart.  Whoever did this study obviously didn't pay attention to the details.  A 5 pound box of original bisquick (the 14.52 is for gluten free) costs 12.66 - 13.29.  I doubt that 6 dollar box at Walmart is 5 lbs.  It took less than a minute of internet research to find this information.  Hope they didn't spend too much on that study.
Jun 27, 2012 6:24AM
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I have been buying at Amazon for about 10 years. They are the best for availability, service and shipping speed. As a prime customer all my goods are received within 2 days. For a fee (under $4), I can receive an order in one day. Their prices are always in the ball park. Nearly 400 items ordered, they have never failed me. Amazon is the best. I have no arguments agaist Walmart but they are not in the same league as Amazon.
Jun 26, 2012 8:19PM
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i love amazon.thats all i got to say.
Jun 26, 2012 10:47PM
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Amazon has always come through for me, and Walmart, well.what can you say? It is what it is;)
Jun 26, 2012 7:29PM
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Walmart is ok for foodstuffs and "gotta have it NOW" but for quality and selection, AND price Amazon is great.
Jun 26, 2012 6:37PM
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I am going to date myself, remember when most everything was from Japan and our parents complained about that, at least there stuff held together better then China. I don't shop on line but I have heard Amazon is the best. I live next door to a Wallmart so I know what goes on there, its alful, ever notice there brand in the food section is higher then the name brand stuff. You people are right customer service stinks, I asked one of the supervisors on Memorial Day, why they had 3 registers open with all the people in the store, she said the manager  wants to keep the costs down, what a joke with the money there making and the wages they are paying there workers no wonder there workers don't want to help people, Wallmart should be ashamed of there self.
Jun 27, 2012 12:33AM
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walmart doesnt carry everything you want. you can pretty much find it on amazon.
Jun 26, 2012 4:58PM
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To me Wally world dosen't have nearly the selection that amazon has. I tend to buy dvd concerts and wall mart just doesn't carry those! Their Sales staff are rude and that is if you happen to find someone who actually works there, not to mention that they have like 30 checkouts and you only have one cashier working. I find shopping on amazon is a much more enjoyable experience!
Jun 27, 2012 10:05AM
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I will pay for a little extra if needed just so I don't have to actually step inside a Walmart.  
Jun 26, 2012 3:53PM
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Gee...maybe because Amazon.com doesn't edit the crap out of CD's and DVD's! Walmart ruins the originality and removes every cuss word and intimate scene rather than ask for ID from the consumer. At least that's why I won't purchase media from Walmart.
Jun 26, 2012 5:18PM
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I love Amazon.  One of the main reasons is I can find what I want without wandering around in a big store.
Jun 27, 2012 7:15AM
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I wonder how much Wal-Mark paid for this study? Of course wal-mart is going to be cheaper than Amazon on a number of different products, but who buys their groceries at Amazon? Really, these studies are a waste of time and money, you can't believe any of them. Just like you can't trust political opinion polls or election polls, it's too easy to phrase the questions to get the result you are looking for, and then there is the demogracphics, you will get different results from different demographics, so all of these things have to be considered.
Jun 26, 2012 3:55PM
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Shop at both,but weakly Wal-mart is out of stock of at least one item i would buy.  Also, they rarely carry the optional Made in USA item.  Items I purchase through Amazon are just not available at Wal-mart at any price.  So go figure.
Jun 27, 2012 1:32AM
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It depends...most of the items in walmart are made in china, hence cheaper, but you can find the same item on amazon for n number of brands, not necessarily Chinese manufactured, hence may be a little expensive and durable. I personally prefer amazon because their prices are very competitive and they have more options, products, reviews, availability, etc.
Jun 26, 2012 5:39PM
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Walmart offers deep discounts on dvds?? Since when?! The Walmart here never has sales on dvds, and if you plan on comping the price from another store, you have to have an actual printed ad from that store. They've even banned using smart phone apps. It's rediculous.
Jun 27, 2012 11:18AM
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I usually check Amazon first. But if I need/want it now, I drive past Wal-Mart and find a Target.  Target may have fewer checkout lanes, but at least the ones they do have will be open.

Jun 26, 2012 4:59PM
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I usually compare walMart and Amazon for an item. Most of the time Amazon wins hands down.
Jun 27, 2012 10:57AM
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What I often fin in articles like this is they concentrate on the price alone, seldom take in the over cost of the including, tax, shipping, and convenience.

 

I live in the country, so I have very few options when it comes to purchasing many items I need locally, and have found that in today’s economy it is often less expensive to purchase many items, excluding food, on line.  So I shop Wal-Mart on line, Amazon, and e-Bay.  Before purchasing I take in to consideration the following Price, Sales Tax, Shipping, convenience and go with the best deal.

Jun 26, 2012 9:45PM
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Walmart has sent jobs out of our country.
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