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  • When Amazon started selling more than just books in the

  • late 1990s, it suddenly entered into a rivalry with

  • the biggest name in retail.

  • Always low prices, always Walmart.

  • Walmart has been at the helm of American shopping for

  • 58 years.

  • It employs more people than any other company in the

  • world. And 90 percent of Americans live within 10

  • miles of one of Walmart's more than 4,700 U.S.

  • stores. The staggering size of Walmart kind of escapes

  • people. It's the largest corporation in the world in

  • terms of revenue. Yet when it comes to e-commerce,

  • Amazon is the clear leader, with 38.7 percent of the

  • market share compared to Walmart's 5.3 percent.

  • And with the global pandemic shifting shopper's

  • behavior for good, dominance in online shopping is now

  • paramount. So if you're that second site, you got to

  • be really good. You don't have to be as good as

  • Amazon, because no one will get there.

  • That's utopia. In perhaps its clearest competitive

  • move against Amazon to date, Walmart is now launching

  • Walmart Plus. The membership program is meant to rival

  • Amazon Prime, offering benefits that can't be

  • replicated online.

  • These guys are toe-to-toe and nobody wants to stop

  • swinging. Nobody wants to back down.

  • You know, the consumer is ultimately the beneficiary,

  • clearly. Here's a look at how Walmart Plus compares to

  • Amazon Prime and all the other ways Walmart is trying

  • to catch up as the pandemic makes online shopping an

  • increasingly crucial part of doing business.

  • Walmart has been working behind the scenes since at

  • least 2018 to create a competitor to Amazon Prime.

  • From our data study, we found that two thirds of people

  • that had already joined our premium loyalty program

  • would join another one.

  • Although the landing page says Walmart Plus is coming

  • soon, the pandemic delayed its planned release in the

  • spring. Walmart stock surged seven percent when it

  • looked like it would launch in July, but that didn't

  • happen either. When Walmart Plus is available, members

  • will likely pay $98 for benefits like unlimited

  • same-day delivery on groceries from the 1,600 of its

  • 4,700 plus stores that do grocery delivery n ow.

  • When we did our data study, 81 percent of the consumers

  • joined Amazon Prime because of faster free shipping.

  • Only two percent joined because of grocery delivery.

  • So I think it's a real opportunity to leverage what

  • they already have in groceries and maybe what Prime

  • doesn't. And just this week, Walmart announced a

  • partnership with Instacart, testing out same-day

  • grocery delivery in four markets across California and

  • Oklahoma. Other perks are rumored to include early

  • access to sale events, discounts at gas stations

  • outside of Walmarts and Walmart-owned Sam's Club

  • stores and reserved parking spots in store lots.

  • As you think about Prime, 150 million, why would you go

  • head to head with that? If you take a unique approach,

  • which it sounds like Walmart is doing, you might be

  • able to get a lot of those customers.

  • Amazon launched Prime for $79 a year in 2005, at a time

  • when Walmart's profits were greater than all of

  • Amazon's revenue. If you look back at 2005 Prime had

  • one benefit, fast and free shipping, two-day shipping,

  • which was like unheard of.

  • Fifteen years later, some 150 million Prime members pay

  • $119 a year for one-day shipping on more than 10

  • million items with no minimum purchase amount,

  • same-day shipping on some three million items,

  • two-hour grocery delivery in 2,000 plus cities, deals

  • and sales events like Prime Day and access to Amazon's

  • entertainment branch, Prime Video, Amazon Music, Prime

  • Reading, Prime Gaming and Amazon Photos.

  • It's a pretty compelling value proposition, and that's

  • what anyone will have to deal with, w hat if they want

  • to try to compete with Prime?

  • Walmart doesn't have any entertainment offerings of its

  • own, now that it sold Vudu in April.

  • P rime members make up about 65 percent of Amazon's

  • customers and the program has a 95 percent renewal

  • rate after two years.

  • Walmart started chasing this type of loyal customer in

  • May 2019 by offering free next-day delivery on orders

  • over $35, less than a month after Amazon announced its

  • default one-day shipping.

  • With Walmart Plus, all orders will default to free

  • one-day shipping just like Prime.

  • Despite the launch of Walmart Plus and free fast

  • shipping, Walmart still lacks one big thing that

  • Amazon has - sheer volume of inventory.

  • Walmart.com has about 50,000 vendors selling items

  • online, while Amazon has 8.7 million.

  • That's why in 2016, Walmart bought discount online

  • retailer Jet.com for 3.3 billion dollars.

  • The acquisition brought relationships with a slew of

  • brands that were already comfortable selling on

  • Jet.com .

  • They are on track to more than quadruple their online

  • business since they acquired Jet.

  • It was an uh-oh moment for every other brick-and-mortar

  • retailer, because now the biggest brick-and-mortar guy

  • is now, you know, moving heavily online.

  • E-commerce is a scale game and you want to get as much

  • leverage as you can on your fixed infrastructure.

  • And as you get bigger, cost of goods goes down and you

  • get more leverage. Marc Lore spent two years at Amazon

  • before breaking off to start Jet.com , working to

  • undercut prices from the e-commerce megastores.

  • Walmart's purchase of Jet.com was the big move that

  • brought it into the big leagues of online shopping.

  • When the deal was made in 2016, Lore signed a five

  • year contract to run Walmart's e-commerce division.

  • I'm so excited to be at Walmart, having a lot of fun.

  • We're going to keep talking to you because I think that

  • you're the most inventive man in retail today.

  • Walmart shut down Jet.com in May, but it had already

  • brought an entirely new branch of online sellers onto

  • its marketplace. Walmart CEO Doug McMillon says he

  • would buy it all over again.

  • If you look at the trajectory of our business, it

  • changed when we made that acquisition and we've been

  • able to attract brands to Walmart.com - S'well, R

  • ay-Ban and Champion.

  • Historically, Walmart.com didn't sell things from

  • third-party vendors, but since the Jet.com acquisition

  • the number of products sold on Walmart.com has grown

  • up to 10 times higher, and the number of sellers on

  • its site doubled just in the last year.

  • So they started attracting more brands.

  • They retooled their website to be more streamlined and

  • more intuitive, more user-friendly.

  • And last year, Walmart partnered with Advance Auto

  • Parts. Walmart was not going to be a 100,000 SKU auto

  • parts retailer on its own.

  • They get that with Advance Auto.

  • This is probably the largest third-party relationship

  • that any online retailer has with a brick-and-mortar

  • retailer. And in an effort to reach a new type of

  • customer, Lore spearheaded the purchase of several

  • specialty apparel companies like Bonobos, ModCloth and

  • Eloquii, a lthough some have been sold again since.

  • A big portion of Walmart store customers are

  • lower-to-middle-income. I think what they tried to do

  • here and through the Jet.com brand was to continue to

  • go up market and go for more profitable customers,

  • urban millennials. And then they also introduced the

  • service Jetblack, which is an upscale personal

  • shopping service. For a large fee, Jetblack allowed

  • New York Walmart customers to text orders to personal

  • shoppers for home delivery.

  • But Walmart shut it down in February after it only saw

  • about 600 active members.

  • If we think about the dynamics of the very, very

  • affluent and wealthy today, I don't know if Walmart is

  • necessarily the company to be housing a brand like

  • that. But in June, Walmart pivoted again, announcing a

  • major partnership with Shopify.

  • Often referred to as the king of mom-and

  • pop-retailers, Shopify helps more than 1.4 million

  • small businesses run their online stores.

  • Now, these small businesses have a channel to try

  • selling on Walmart.com.

  • For now, Walmart says it's adding 1,200 of Shopify's

  • top merchants to its site in 2020.

  • Walmart wants a curated assortment on the website.

  • I mean, Amazon has a very wide-ranging third-party

  • business, and with th at comes some risk.

  • The partnership with Shopify is really important, I

  • think it's very strategic.

  • And I do think it is an attempt to pull away those

  • third-party sellers on Amazon.

  • There has been kind of a lot of tension between

  • third-party sellers and Amazon.

  • On July 29th, Jeff Bezos testified before Congress for

  • the first time in Amazon's 26 year history, partly in

  • response to questions about reported use of

  • third-party seller data to develop Amazon's own

  • competing products. The House Judiciary Committee is

  • investigating whether Amazon, along with Apple,

  • Facebook and Google, need to be governed by stricter

  • antitrust laws.

  • Why should a third-party so list their product on

  • Amazon if they're just going to be undercut by

  • Amazon-own ed product as a result of data you take

  • from them? I think what I want you to understand, and

  • I think it's important to understand, is that we have

  • a policy against using individual seller data to

  • compete with our private label product.

  • You couldn't assure Ms. Jayapal that that policy isn't

  • violated routinely.

  • While Amazon is battling to keep the trust of its

  • third-party sellers, Walmart still has a long way to

  • go if it wants to catch up with the millions of

  • third-party sellers that make up more than half of

  • Amazon's sales. The Walmart marketplace is a lot

  • smaller, so you could be, quote unquote, crushing it

  • on page one on Walmart and you're still not getting

  • that many sales. Still, Walmart has one big, long

  • standing advantage over Amazon, its 11,500 global

  • stores. If you're a third-party seller, like if you

  • can get into brick-and-mortar Walmart, you're going to

  • crush whatever sales on Amazon you're doing.

  • For sellers choosing where to reach customers, stores

  • are a big bonus and much more scalable.

  • So this diet pill company I worked at, they had 30

  • different products that we were selling on Amazon.

  • I launched a whole bunch of them. We brought their

  • sales from one million to three million.

  • And I thought that was like the greatest thing in the

  • world. But that was nothing, because I would see

  • purchase orders come across my desk for the Walmart

  • brick and mortar side, for the Walmart stores, there

  • would be like two million dollars just for like one

  • region of the United States.

  • Walmart stores also help keep down its costs in the

  • most expensive area of online retail - shipping.

  • If you can leverage those stores as your fulfillment

  • centers, meaning if I'm going to purchase something

  • and I'm in the Philadelphia area, have it come from

  • the store that's three blocks from my house as opposed

  • to Virginia , you know, price points go down and speed

  • goes up. Amazon has been spending wildly to try and

  • control the expensive shipping process, but it's 175

  • fulfillment centers and own network of planes, trucks

  • and contracted delivery drivers don't come close to

  • the reach of Walmart's 4,700 stores that allow its

  • trucks and drivers to travel a fraction of the

  • distance. Walmart had the advantage of getting product

  • from distribution center to the store, and then the

  • consumer handles the last mile for a lot of it.

  • Walmart uses its stores as distribution centers for

  • products, but also has its own dedicated network of

  • warehouses without a front-facing store.

  • Walmart remains dominant in another sector that's

  • largely dependent on brick-and-mortar stores -

  • groceries. We're not very densely populated, and so

  • it's hard to service, in an e-commerce model, grocery.

  • So what that means is that Amazon is really at a

  • little bit of a disadvantage relative to Walmart.

  • They have stores within 90 percent of the population

  • in the United States. Grocery sales account for more

  • than half of Walmart's U.S.

  • revenue, making Walmart the nation's biggest grocer.

  • Walmart's been selling groceries directly to