Broad Street Licensing Group Food News

Walmart v. Amazon.com (Part 1)

Cyber Monday sales continue to set new records reaching $1.5bn in 2012 alone, up 20% from 2011.

This is just part of a trend that some analysts say could have Amazon.com seize the title of “world’s largest retailer” from Walmart someday.

The cyber-seller saw top line growth of 44% in 2010, torrid compared to Walmart’s otherwise robust single digit same store sales.

At least that’s apparently the thinking inside the Bentonville Behemoth.

Disclaimer: the information provided in this post derives entirely from news sources & other public information. It is in no way meant to imply any proprietary information about Walmart or Amazon.com, nor does it derive from any contact with these retailers by Broad Street Licensing Group or any of its employees.

This concern with e-commerce might seem silly, given that Walmart is ten times larger than Amazon. But analysts report the mass market giant is worried about Amazon’s aggressive intrusion into packaged goods sales. This coupled with the fact that Walmart’s online sales are 10% of Amazon’s. Online marketing is seen as a portal for reaching the young, hip urban consumer, a space the mass marketer has lagged in.

Tied to this strategy is the Walmart’s plan to open more small-footprint stores in city markets (dubbed Walmart Express) where supercenters either don’t adapt well or have been blocked by various groups and competitors (e.g., New York City, where a troika of business groups, community activists and some city council members has thwarted attempts to enter that market).

And just how far has e-commerce come? While most large CPG houses sell no more than 1% online, some categories have shown breathtaking growth with e-tailers. Amazon is now in the top 5 sellers of Proctor & Gamble’s Pampers disposable diapers. Diaper sales continue to outperform online at bricks & mortar supercenters, club and drug stores, but grocery store sales of diapers have fallen behind e-commerce. Amazon isn’t standing still, either, having acquired Quidsi’s Diapers.com and Soap.com websites in 2010. The fallout, though, has depressed profits for the online giant, while those at Walmart have remained robust.

So far, advantage Bentonville.

(Part 2 of this article will be published tomorrow)

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