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The author is clearly passionate and brings a lot of detail, but it was always my amateur impression that Walmart won primarily on footprint. They covered the country in stores, and not just the suburbs, but also rural America where the likes of Target and Kmart never ventured, and shops with much smaller selections and different formats were the norm. I don't perceive Amazon as an 'unbounded' Walmart like the author does, but as an aggregator as thoroughly analyzed by Ben Thompson of Stratechery fame. They bootstrapped a destination with undifferentiated products, a broad selection, and convenience, and later bolted on a marketplace to further capitalize on the traffic. But the dynamics of customer-facing marketplaces are very different from those of internal ones like those of Walmart and McDonald's. McDonald's puts out specs and has suppliers compete for restaurants' buys, and Walmart and Costco have immense purchasing leverage with suppliers, this process results in optimizing the desired quality-to-cost ratio the retailer wants to target. Amazon, on the other hand, is a free-for-all, where selection is overwhelming, products with obscure branding appear to rip each other off to the point where no obvious choice rises above, human curation is absent, reviews frequently appear gamed, prices change arbitrarily, products are gated behind Prime and are subject to obscure shipping math, and despite being long perceived as having low prices, pricing on products is now being used as a signal. Amazon is hardly anything more than a digital flea market, where Amazon is the landlord and some of the vendor booths are staffed by them directly. A wildly successful and profitable one, and one that draws marketshare away from traditional retail, but it diverges so far from the formula of retail that comparisons with them are of questionable value. |