Publish with us

Follow Penguin

Follow Penguinsters

Follow Hind Pocket Books

Amazon Vs Walmart: Who’s Winning the Battle for Your Buck?

Curious about the evolving retail landscape and the roles played by industry giants like Amazon and Walmart? In Nirmalya Kumar‘s Clash, find out how these titans impact the lives of everyday consumers, giving a new meaning to digital convenience and challenging the traditional shopping experience. ​

Read this excerpt as the world’s two largest companies, redefine retail and business best practices, and fight the ultimate battle for your buck!

CLASH
CLASH: Amazon vs Walmart || Nirmalya Kumar

***

In the charming suburban town of Harmonyville lived a woman named Elimijn, a dedicated and caring housewife. Her days were filled with taking care of her family, managing the household and pursuing her creative hobbies. Two giants, Amazon and Walmart, played unexpected and integral roles in her life’s journey.

 

Elimijn was an avid reader and an aspiring artist. She loved exploring different genres of books and finding new sources of inspiration for her art. Amazon became her digital haven, offering an extensive collection of books, art supplies and crafting tools. With a few clicks, Elimijn could order the latest bestseller, a set of watercolour paints or even a specialized easel, all delivered right to her doorstep.

 

But Elimijn’s affection for retail didn’t end online. Walmart, with its sprawling store just a short drive away, provided a unique sensory experience. Elimijn enjoyed the tactile pleasure of wandering through its aisles, exploring a vast variety of products. She would often visit with a list in hand, making her way through the neatly organized shelves, hand-picking fresh groceries, household essentials and even some affordable fashion finds.

 

What set Amazon and Walmart apart in Elimijn’s heart was their balance in her life. Amazon’s convenience saved her time and effort, allowing her to spend more precious moments with her family and immerse herself in her hobbies. On the other hand, Walmart’s physical presence gave her a chance to step out, breathe in the air and indulge in a bit of old-fashioned retail therapy.

 

During holidays, Amazon’s quick shipping helped Elimijn avoid the holiday rush. She could order thoughtful gifts for her loved ones, wrapping them up with care and sharing the joy of giving. But the annual tradition of visiting Walmart to select the perfect Christmas tree with her family remained unchanged. The smell of pine needles, the twinkling lights and the festive atmosphere created cherished memories that couldn’t be replicated online.

 

Elimijn’s relationship with these retail giants wasn’t just about transactions. It was about the roles they played in her life’s narrative. Amazon’s efficiency became a trusted ally in her daily routine, while Walmart’s physical presence provided a sense of connection to her community. In a surprising twist, Elimijn’s creative endeavours gained recognition online. Her artwork found a following on social media, and soon enough, she was approached by both Amazon and Walmart to collaborate on exclusive lines of products. Amazon showcased her art supplies and books, while Walmart featured her artwork on select merchandise. Elimijn found herself at the crossroads of the very stores she had come to love. Her story was a reminder that these giants weren’t just about commerce—they were about opportunities, experiences and connections. Through Elimijn’s journey, Amazon and Walmart became not just retailers, but integral parts of her life, shaping her routines, her passions and even her dreams.

 

The battle between Amazon and Walmart, or more generally between online retail and physical stores, is often presented as a zero-sum game. It is believed that as online retailing becomes more popular, consumers will increasingly abandon brick-and mortar stores. Clearly, there is some evidence supporting  this as many traditional retail chains have gone bankrupt while online retailers like Amazon and Alibaba continue to deliver dramatic growth numbers. This difference in growth is also reflected, as noted earlier, in the hefty valuation that the markets place on disruptive e-commerce players relative to incumbent physical retailers.

 

In this chapter, we will build a more nuanced picture of this competition. Specifically, we will investigate if there are certain types of customers, particular buying situations and some product categories where the relative attractiveness of physical stores like Walmart is superior to online stores like Amazon  and vice versa. In exploring this, we will restrict our focus to the US, as it is the country where online retailing began and is most evolved, while also being the largest source of revenue for both Amazon and Walmart. Furthermore, we will use my Marketing as Strategy book’s 3Vs framework of valued customer (who to serve?), value proposition (what to offer?) and value network (how to deliver?) to investigate the differences between these two retail giants. The valued customer and value proposition aspects are discussed in this chapter, while the value network will be the focus of the next two chapters.

 

Who is the target segment for each retailer? Market segments, as we are taught, should be mutually exclusive and collectively exhaustive. Therefore, instinctively, marketers seek to answer this question by demonstrating that the types of people, based on demographic variables such as age, sex, education, income and geographical location, who prefer Amazon are different from those who patronize Walmart for their shopping needs.

 

However, customers in the real world, as the data will show, do not fall neatly into well-defined boxes. When asked, people often respond that relative to Walmart, Amazon shoppers are younger, more urban and educated, with higher income levels. They also see Amazon shoppers as more technologically savvy, forgetting that ordering on the mobile phone app is not a novelty or challenging any more. While the data does feed this stereotype to some extent, the differences in these demographic variables between Amazon and Walmart shoppers are not that dramatic, and furthermore, are decreasing over time.

 

Research indicates that the average (mean level) income of Amazon shoppers at $84,449 is only 11 per cent higher than for those who shop at Walmart ($76,313).2 Digging deeper, the typical (modal level) Walmart shopper is a married white woman with an undergraduate degree, between fifty-five and sixty-four years old, living in the suburbs of south-eastern USA, earning about $80,000 annually.3 However, this segment also frequents Amazon because Amazon’s typical shopper is a college-educated married woman, living in the south-east, earning more than $80,000 a year, but split across two age brackets: thirty-five to forty-four and fifty-five to sixty-four. Thus, a segmentation based on demographic variables does not give an accurate picture, as consumers do not shop exclusively at either Amazon or Walmart, which I am sure also reflects the behaviour of any American reader of this book.

 

***

Get your copy of CLASH: Amazon vs Walmart by Nirmalya Kumar wherever books are sold.

Is Consumer India on the Brink of a Lifestyle Revolution?

Discover the intricate world of consumer India in Lilliput Land by Rama Bijapurkar. Explore the aspirations and attitudes towards credit that shape consumer India’s behavior and learn through the many valuable insights for businesses navigating this dynamic market amidst India’s digital revolution.

Let the Mega Consumption story begin!

 

 

Lilliput Land
Lilliput Land || Rama Bijapurkar

***

A lot has been written about this in media stories and books, and ‘the changing Indian consumer’ is a favourite conference topic. However, given the structure story of the many Indias, all these anecdotes and observations of how different parts of the elephant behave need to be distilled into a holistic view of the nature of the beast. This chapter looks at key shapers of behaviour—aspiration, dignity, Indian identity, brand orientation, the phenomenon of monster consumers, how to understand and navigate heterogeneity of the market for strategy development, and how to read change in the confusing way in which Consumer India changes. Shapers of Consumer India’s Consumption Behaviour A macro-consumer view of the people of India Consumer India, as the previous chapter on structure has demonstrated, is a fragmented and complex hydra-headed monster, based on just its economy, demographics and living conditions. Add to that a layer of different social and cultural factors aff ecting diff erent parts of Consumer India (including community, region, politics and language), and diff erent levels of exposure to diff erent worlds outside, it gets even more complex. Requests asking me to speak on the topic of ‘Indian Consumer Behaviour’ or ‘Changing Consumer Behaviour in India’ terrify me. How does one capture the enormity of behaviour variations in Consumer India? No matter what one could say, the opposite would also be true in some audience members’ recent experience! Therefore, for reasons of both prudence and competence, this chapter will not attempt the near-impossible task of chronicling diff erent kinds of consumer behaviour and diff erent patterns of consumption.

 

The focus of this chapter will instead be on understanding the lives, mind spaces and attitudes that shape the behaviour of the people who comprise Consumer India. This is useful because consumption and brands do not live in the narrow confines of a market space but exist as a part of the larger canvas of  people’s lives. Serving a consumer base without understanding what makes it tick does not make for winning businesses, sound market strategies or creating brands that deeply resonate with consumers.

 

This chapter has three sections:
1. Shapers of Consumer India’s consumption behaviour: A few important themes that are common and relevant to all income groups.
2. Structure and drivers of heterogeneity in Consumer India and how to think about consumer segmentation.
3. How India changes and reading change in Consumer India.

 

As everywhere in this book, this chapter will also examine many of the commonly held hypotheses and theories about Consumer India to test their validity and change, nuance or caveat them as the case may require.

 

Section I:

Shapers of Consumer India’s Consumption Behaviour This section identifies and explores a few important themes that are common across all of Consumer India and shape the consumption behaviour of all income groups. A Tectonic Shift from Acceptance to Aspiration, Facilitated by Credit.

 

Aspirational India is a tectonic shift from the pre-liberalization days when we would often hear consumers of lower-income groups tell us in focus groups, ‘This is not for me, this is for the badey log (big people).’ Now, there is a strong statement of, ‘I want to have something like that, be it products or experiences.’ A car is obviously not affordable, but a bike and a taxi for special family outings is. Now, having what celebrities have has become easy with social media. Copies of actress Alia Bhatt’s mehendi pattern and cheap knock-offs of her wedding dress are available. Influencers and beauticians of every social class tell you how to use make-up like celebrities do and style yourself at a price point that you can afford. As ad man Santosh Desai puts it, the big shift is that ‘life is not a condition to be endured but a product to be experienced’. Aspiration-led living is the opposite of the way it used to be. The attitude and mindset shift is from ‘this is what I have and how do I manage best within it’ to ‘this is what I want, so how do I manage to get it’. We see this resulting in choices which can best be described as ‘stretch for more, do not settle for less’. Borrow and buy the higher category car or two-wheeler or buy a second-hand one rather than settle for the easily affordable small car, even if it means waiting a bit, buying a pre-owned vehicle or taking a loan.

 

Credit or borrowing for consumption once considered a very dangerous thing, is now acceptable and ‘normal’ to Consumer India. Amazon and consumer durables stores and travel sites helpfully ask you, at the time of checking out, if you want to pay by EMI, that is, equated monthly instalments of credit. Credit is also morally purified. Its cultural label has changed from indebtedness, which can lead to ruin, to being the working capital for life and the helping hand that everybody needs to reach their goals. Financial services companies have been exploiting this attitude shift leading to the regulators and the courts coming down hard and framing laws to curb irresponsible lending that leads to imprudent borrowing, and strong-arm tactics for recovery that lead to customer stress and even suicides. An example of this is what happened to the microfinance industry in 2010 leading to a new law in 2011 that banned MFIs from approaching the doorstep of their customers, lengthened the loan collection cycles and told lenders that they had to get government approval to give a second loan to the same lender. The Reserve Bank of India, India’s banking regulator has issued a charter of customer rights for banks and non-banking financial services companies (NBFC) that includes the ‘right to suitability’, where ‘only products and services that are appropriate to the understanding and financial conditions of the customers may be offered to them.’ It is a caveat venditor (let the seller beware) as far as enforcing this right is concerned.

***

Get your copy of Lilliput Land by Rama Bijapurkar wherever books are sold.

Why Care About Superconsumers?

Superconsumers Beget Superconsumers
The true value of superconsumers lies in their contagious nature. Those you meet are likely to have a crowd of other current superconsumers and potential superconsumers with them. For additional superconsumers, look to their family and friends. Capture and share the superconsumers’ stories, and watch as their knowledge inspires and creates new superconsumers.
Superconsumers Travel in Packs, Creating Super Geos
As the epicenter of demand creation, super geos can be tapped into to drive superior growth in your business. But you must locate and leverage them. The words national average are some of the most misleading in business. Many leaders have an inherent, subconscious belief that demand is spread like peanut butter, evenly and thinly. But the very presence of super geos means that passion for your offering will be patchy, with one set of consumers wild about your product while another group is neither hot nor cold. If you believe that demand is like the flat Midwest, then you’ll be ill prepared to climb the hilly terrain it really is.
Superconsumers Are Superconsumers of Multiple Products
A superconsumer of one category is often a superconsumer of other categories. Cleverly combining two or more important, yet seemingly different categories not only taps into a quest, but can also create a new category—just as American Girl crashed dolls, education, and experiential retail into one category.
Generac, the leading manufacturer of standby generators, found that people who buy three to four times more life insurance and lots of vitamins tend to be great prospects for proactively buying a generator for an extreme event that may never happen. These consumers are superconsumers of proactive protection.
Sometimes the connection between categories is not as clear, as some categories counterbalance one another. For example, superconsumers of milk tend to be superconsumers not of other healthy foods and beverages, but of more indulgent ones like cereal, cookies, and candy. Milk was the perfect accompaniment to sweets—and was probably considered something like an old-school indulgence you could buy from the Catholic Church in advance of a sin you were planning to commit. Counterintuitively, Harvard Business Review reported that shoppers who recycle their grocery bags tended to indulge more in junk food as well.
What Pleasant Rowland created and Mattel helped foster is amazing. American Girl’s remarkable growth may also feel intimidating. But it is more feasible than you might think, especially considering how low the success rates are for innovation in your core business.
The key is to take stock of the state of your business now. Are you hitting your growth goals? How good is your ROI now? What are the odds that your business will still be successful for the next five to ten years?
Of all new consumer packaged goods, 85 percent or more fail. Why? Often, the problem is that they aim too low by trying to solve the same job with a slightly modified product. Companies would do far better aspiring to solve a quest, but falling short slightly and finding that they created a product that consumers wanted to hire for a wholly more important job than its originally intended one.
The most successful businesses today have multiple business models, not just one. How well does a unidimensional business model do against a multidimensional one? Poorly, much like a boxer who runs up against a mixed martial artist who can box, kick, and wrestle. It is an unfair fight. This is both the beauty and the imperative of leveraging superconsumers to create new categories.
Are you looking at transforming your business through an adept use of your consumers? Get Eddie Yoon’s Superconsumers here!
Credit: Abhishek Singh

error: Content is protected !!