WALMART INC.

TAKES ON

AMAZON.COM
Agenda
• Problem Statement (Walmart
Perspective)
• Business model
• Porter’s five forces
• Strategic acquisitions - Amazon &
Walmart
• SWOT Analysis - Amazon & Walmart
• Value Chain - Amazon & Walmart
• ISMAC
• Financial Statement Analysis - Amazon
& Walmart
• Walmart Fulfilment
• Key Takeaways

2
Problem Statement

Grow online business of

Walmart.com

Diversify in non grocery

market

Maintain competitive
advantage in Grocery
business

Cost leadership

3
Business Model
Amazon
Channel Physical Digital
/ Product
Service

Physical

Digital

Walmart
Channel Physical Digital
/Product
Service
Physical

Digital

4
Porter’s Five Forces
High Force
Small Capital
Requirement, low Threat of
switching cost new entry
Low customer loyalty High Force
Access to the technology High quality of information
is uniform High availability of substitute
products

Supplier Competitive Buyer

Power Rivalry Power

Low Force
Codes of conduct related to
quality
Low Force
Threat of E-retail and physical
substitutes retailers

5
Amazon’s Timeline
SECURE & EASY
INTERFACE,
CUST. REVIEWS,
BOOKS RECOMMEND, AMAZON PRIME
SINGLE-CLICK AWS
“BUY-NOW”, KINDLE EREADER AMAZON GO RETAIL
ACQUIRED
ACQUIRED IMDB AMAZON FRESH PRIME AIR
KIVA SYSTEMS

1994 2013
TO TO

1995 1999 2009 2015 2017

1997 2005 2012 2016

TO

2007

FOUNDED & ZSHOPS ACQUIRED PRIME INSTANT VIDEO ACQUIRED

OPENING DAY DRUGSTORE.COM ZAPPOS AMAZON ECHO WHOLE FOODS,
PETS.COM DASH BUTTONS BODY LABS,
OPENED AMAZON BOOKS STORE
ACQUIRED TWITCH

6
Amazon – SWOT Analysis

STRENGTHS WEAKNESSES OPPORTUNITIES THREATS

FIRST MOVER ADVANTAGE LACK OF APPEAL TO EXPANSION TO OVER-DIVERSIFICATION
RISK AVERSE CUSTOMERS INTERNATIONAL MARKETS
STRONG BRAND IMAGE (ASIA, AFRICA, LAM) SECURITY & CYBER THREATS
MARKET PENETRATION HOLDS VAST AMOUNT OF
CUSTOMER LOYALTY (PRIME) DEPENDS ON ACCESS TO DIVERSIFICATION OF CUSTOMER DATA
INTERNET BUSINESS
MULTIPLE CUSTOMER AGGRESSIVE PRICING
TOUCHPOINTS STRATEGY COULD BE A
PROBLEM

S W O T

7
Walmart’s Timeline
FIRST DISTRIBUTION CENTER
MERCHANDISE ASSEMBLY
CROSS DOCKING
COMPUTERIZED INVENTORY
TRACKING ONLINE WALMART.COM
DATA-DRIVEN STORAGE SHOPPING MARKETPLACE FOR ACQUIRED
OPTIMIZATION PLATFORM SELECT VENDORS JET.COM

1983 2011
TO TO
1962 1988 2007 2012 2017

1970 2000 2009 2016

TO

1976

OPENED FIRST WAREHOUSE BUSINESS INTRODUCED ACQUIRED KOSMIX ACQUIRED

DISCOUNT STORE SUPERCENTERS FREE INSTORE PROJECT PANGAEA BONOBOS, MOOSEJAW
PICKUP HAYNEEDLE

PARTNERED WITH
GOOGLE, UBER, LYFT, DELY

8
Walmart – SWOT Analysis

STRENGTHS WEAKNESSES OPPORTUNITIES THREATS

IT COMPETANCE (wrt. AMAZON)
SCALE OF OPERATIONS (US &
INTERNATIONAL – 6300+ STORES)
NOT ATTRACTIVE TO UPSCALE
CUSTOMERS
ESTABLISHED VENDOR ALLIANCES
INORGANIC GROWTH
STATE OF ART SUPPLY CHAIN
STRATEGY
NETWORK
LIMITED CUSTOMER
REPUTATION AS DISCOUNT STORE
TOUCHPOINTS
RETAIL GROWTH IN EMERGING
STIFF COMPETITION FROM ONLINE
MARKETS
& OTHER RETAIL COMPETITORS
ONLINE SHOPPING
THREAT FROM LOCAL
COMMUNITIES
ESTABLISH STRATEGIC ALLIANCES
EXPLORE INNOVATIVE MODELS TO
ENHANCE CUSTOMER SERVICE

S W O T

9
 Why some Platforms thrive and Others Don’t
STRENGTH OF NETWORK EFFECTS
AMAZON – STRENGTH
(EASY TO ADD 3RD PARTY + EST. CUST. REVIEWS)

WALMART – NEEDS TO IMPROVE

NETWORK CLUSTERING
AMAZON – STRONG POINT (GLOBAL SCALE)

WALMART – NEEDS TO IMPROVE

(THOUGH GLOBAL, ACTS LIKE LOCAL CLUSTERS)

RISK OF DISINTERMEDIATION
AMAZON – STRONG POINT
(STRONG VALUE OF DOING BUSINESS ON AMAZON)

WALMART – NO VALUE ADDITION PROVIDED

VULNERABILITY TO MULTI-HOMING
AMAZON – RISK (MINIMIZED BY AGGRESSIVE
COMPETITIVE STRATEGIES)
WALMART – RISK (MINIMIZED BY COST
LEADERSHIP STRATGEY)
NETWORK BRIDGING
AMAZON – STRENGTH (MULTIPLE CUSTOMER
TOUCHPOINTS)

WALMART – RISK (NEEDS TO IMPROVE)

10
Value Chain – Amazon

11
Value Chain – Walmart

12
Change Process – Amazon

4
2006
School of Thought
3

1 1995

People Process Data Technology

Standardization

13
Change Process – Walmart

2012
School of Thought
3

1 2000

People Process Data Technology

Standardization

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MODULAR ARCHITECTURE

Business Processes
Amazon.com
 Solution-as-a-Service
Components

Data

Technology

Walmart.com
 Solution-as-a-Service
Multi-Sided Platform

Infrastructure

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Financial Analysis
Walmart ( million USD)
Amazon ( Million USD)
2,015 2,016 2,017 2015 2016 2017

Net Sales 4,82,229 4,78,614 4,81,317 Net Sales 1,07,006 1,35,987 1,77,866

COGS 71,651 88,265 1,11,934

COGS 3,65,086 3,60,989 3,61,256
Gross Profit Margin 24.3% 24.6% 24.9% Gross Profit Margin 33.0% 35.1% 37.1%
Profit Margin 3.4% 3.1% 2.8% Profit Margin 0.6% 1.7% 1.7%

Inventory Turnover 8.09 8.12 8.39 Inventory Turover 7.00 7.70 6.98
Days in Inventory 52 47 52
Days in Inventory 45 45 43
ROA 0.9% 2.8% 2.3%
ROA 8.3% 7.5% 7.1%
ROE 19.9% 18.1% 17.2% ROE 4.5% 12.3% 10.9%

Table 1: Walmart Financial Analysis Table 2: Amazon Financial Analysis

Non Grocery Business Amazon Walmart

COGS 69.60% 68.20%
Marketing cost 4.00% 0.50%
IT Cost 3.50% 1%

Fulfilment/ warehousing 9.5% 2.0%

Operating income 3.00% 10.60%

Table 3: Walmart/Amazon Non-Grocery Market

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Walmart Fulfilment

Online retail

Buy online, pick

19
up in store
Key Takeaways
• Customer touch points ( Google home /Uber)
Marketing • Segmentation basis age , geography and income
• Expand customer base : product, pricing and promotion ( This
Strategy will help to grow as platform)

• Sales mix:56%
Grocery market • Retained earnings for marketing and distribution

advantage

• Inorganic growth strategy.

Acquisitions & • Develop multiple partners like Google and Uber
• Efficient expansions in domestic and other markets
Platform sharing
• Resource optimization: fulfilment centres
• Last mile delivery: developing own infrastructure rather
Distribution depending on 3rd part Uber and others
• Walmart pharmacy last mile delivery

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THANK YOU

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