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Tag: Economics

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

Posted on by prathod

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

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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.

 

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

5 innovative insights to get started with your start-up!

Posted on by swara

Startups have changed the world. In the United States, many startups, such as Tesla, Apple, and Amazon, have become household names. The economic value of startups has doubled since 1992 and is projected to double again in the next fifteen years.

As venture capitalist Alexandre Lazarow shows in this insightful and instructive book, this Silicon Valley ‘gospel’ is due for a refresh–and it comes from what he calls the ‘frontier,’ the growing constellation of startup ecosystems, outside of the Valley and other major economic centers, that now stretches across the globe. The frontier is a truly different world where startups often must cope with political or economic instability and lack of infrastructure, and where there might be little or no access to angel investors, venture capitalists, or experienced employee pools.

Here’s a glimpse into some of these insights for all you future entrepreneurs!

 

Learn from the microfinance industry

‘In [the industry’s] early days, a key insight was that the poor were creditworthy borrowers. By placing borrowers into groups with a sense of strong social accountability and shared responsibility on the loans’ repayment, microfi nance lenders found that repayment rates were high.

But this insight was also the biggest challenge: the in-person nature of putting people in groups, making regular visits to collect money, and maintaining deep customer engagement is expensive. Companies like Tala, Branch International, and Safaricom’s own M-Shwari now offer consumer loans, relying entirely on the mobile money platform.’

Front cover of Out-Innovate
Out-Innovate || Alexandre Lazarow

 

Create rather than disrupt

‘Timbo Drayson founded OkHi, a technology-driven startup that creates addresses where there are none. OkHi’s mission statement is “Be Included.”

Creators do three fundamental things simultaneously. First, they offer a product or service that solves an unserved, acute pain point in the formal economy. Second, Creators offer a solution for the mass market. Finally, Creators are focused on game-changing innovations that fundamentally rethink a market and a sector.’

 

Raise a camel, not a unicorn

‘The growth-at-all-cost model simply does not translate to the realities of the Frontier. Instead of the unicorn, then, I propose the camel as the more appropriate mascot. Camels live in and adapt to multiple climates. They can survive without food or water for months. Their humps, primarily composed of fat, protect them from the desert’s scorching heat. When they do find water, they can rehydrate faster than any other animal.15 Camels are not imaginary creatures living in fictitious lands. They are resilient and can survive in the harshest places on earth.

Signing up for Silicon Valley’s unicorn-hunting strategy is a bit like mortgaging your home to buy three new homes. If things go well and the market moves in the right direction, then the rewards are massive. Facebook’s eye-watering returns for investors are a case in point. Yet this approach also increases the likelihood of losing everything.’

 

Build A-teams, don’t hire just A-players

‘…in Silicon Valley, companies and employees see their relationships as short-term affairs. Retention rates are among the lowest in the United States. More than 13 percent of staff turn over every year, and in certain job categories like user design, the rate is well above 20 percent, which translates to short employee tenure.

Frontier Innovators […] use fi ve key strategies to build and scale top teams. They test candidates for behavior and capabilities, develop a proprietary talent pipeline, leverage global distributed options, take a growth mindset to retention and training, and think critically about compensation and perks.’

 

Cross-pollinate

‘Frontier Innovators […] cross-pollinate. They leverage diverse lived experiences, often across multiple geographies, industries, and sectors, to build their businesses. They tap global networks for capital and resources.

At the Frontier, a typical innovator’s lived experience is longer and spans geographies, sectors, and industries. This diversity in experience explains the issues they choose to tackle and the unique approaches they employ.’

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With rich and wide-ranging stories of frontier innovators from around the world, Out-Innovate is the new playbook for innovation–wherever it has the potential to happen.

Decoding Amartya Sen – the man, the economist, the visionary

Posted on by vanyajaiswal

Nobel Laureate Amartya Sen is one of the world’s best-known voices for the poor and the downtrodden, and an inspiration for the proponents of justice across the globe. He has contributed almost without peer to the study of economics, philosophy and politics, transforming social choice theory, development economics, ethics, political philosophy and Indian political economy, to list but a few. In How to Read Amartya Sen, Lawrence Hamilton provides an excellent, accessible guide to the full range of Sen’s writings, contextualizing his ideas and summarizing the associated debates. In elegant prose, Hamilton reconstructs Sen’s critiques of the major philosophies of his time, assesses his now-famous concern for capabilities as an alternative for thinking about poverty, inequality, gender discrimination, development, democracy and justice, and unearths some overlooked gems.

Today, we are sharing with you some interesting insights from the book on Amartya Sen that would strengthen your understanding of him as not just as an economist, but also as a deeply sensitive man and a visionary par excellence.

 

1) The man

‘For many years, Sanskrit was Sen’s second language, after Bengali, and he could read classical, Vedic and epic Sanskrit. This fascination with the language and literature of Sanskrit also balanced and complemented his acumen in mathematics. Both of these important skills have been readily apparent ever since in his academic work, often side by side in the same volume.’

 

‘Sen is also a child of the Bengal famine and Indian Partition. He experienced at first-hand as a nine-year old boy the horrors of the Bengal famine of 1943, as he did a little later the horrors of communal violence of Partition. In a number of places in his academic and non-academic work, he tells the story of how, during the sectarian tensions and violence that accompanied Partition, a Muslim man, a poor day-labourer, was attacked by a gang in his mainly Hindu area. The man was still alive as he stumbled into Sen’s childhood home; the now slightly older boy helped organize to have him sent to hospital. Unfortunately, he did not survive. Not only does Sen use this story to illustrate his oft-repeated and convincing point about the dangers of sectarianism and dogmatic community and identity-based thinking, but also that, despite his wife imploring him not to go into Hindu areas in this period fearing for her husband’s life, this poor man felt impelled to do so as he was the breadwinner for his family and could get work nowhere else.’

 

2) The economist

‘First, despite his training in the mainstream of strait-laced post-Second World War economics, in exemplary fashion he grasped the opportunities provided to him and schooled himself in the main currents of contemporary philosophy. This gave him a much broader and more capacious view of the assumptions of the ‘dismal science’ of economics, the main shibboleths of which would be his targets for years to come…. in line with two of his greatest forebears and two of the political economists upon whom he draws most, Adam Smith and Karl Marx, he has done all he can to understand the main problems and issues in economics from the perspective of a broader ethical concern: improving the quality of life of all.’

 

‘Second, especially in his work on famines, but also right across his many contributions in other areas, such as development, freedom, justice and democracy, Sen has always immersed his reader in his deep and broad knowledge of theory, while never tiring of supporting his claims and arguments with relevant empirical facts.’

 

‘Sen’s theoretical and practical proposals based on his version of capability value the agency of individuals in and of itself – as constitutive of a life worth living – and because they tend to produce better overall effects in development projects.’

front cover of How to Read Amartya Sen
How to Read Amartya Sen || Lawrence Hamilton

 

3) The Visionary

‘While…Sen is first and foremost a man of letters (and numbers), he has also been involved in a number of practical projects that have changed the way the world thinks about and carries out a number of important and pressing matters, particularly as regards development. In fact, it is his work for and criticisms of large international bodies such as the United Nations (UN) and the World Bank (the Bank), and many others besides, that has broadened his appeal and fame, along with his associated practical contributions to, for example, global attempts to eradicate poverty and reduce inequality.’

 

‘Sen has provided new ways of conceiving of development, as well as new tools for measuring it and its component parts: famine, poverty, inequality, growth, freedom and so on.’

 

‘Sen’s view of freedom is much richer than is the norm in a great deal of economic, development, philosophical and political theoretical literature: it encompasses both the requisites for individuals to make their own individual choices and the social, economic and political means for individuals to exert the necessary democratic power within and beyond their own societies.’

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5 Specific Weaknesses that Have Prevented India from Realizing its Full Potential from ‘India: Still a Shackled Giant’

Posted on by Penguin India

India is one of the largest economies in the world today and it has been predicted that it would become the third largest economy by 2030. Yet, an average Indian is worse off than his counterpart in other developing nations like Algeria, Indonesia, Mongolia and Morocco. The tethers of corruption and fragility have prevented it from becoming an Asian Tiger.

In India: Still A Shackled Giant, Dev Kar, a former senior economist at the International Monetary Fund shines light on why India is still, even after 70 years of independence, unable to reach its full potential to join democratic giants like the United States, Germany, and Japan.

 

Fragility

Fragility is a state of affairs, consisting of many economic, social, demographic, political, environmental, and security-related pressure points that either strengthen or weaken a nation state. If fragility is left unchecked, the nation can slide towards civil war and break up. The overall fragile states index (FSI) is derived from twelve sub- indices which are: demographic pressures, economic inequality, economy, external intervention, factionalized elites, group grievance, human flight and brain drain, human rights, public services, security apparatus, state legitimacy, and refugees and internally displaced persons (IDPs). (page 15)

India’s overall fragility increased from the ninety-third rank in 2006 to the seventy-second rank in 2018. India’s slide by twenty-one ranks over this period was mainly driven by uneven development (such as rising income inequality), human flight and brain drain, state legitimacy, demographic pressures and security apparatus.

Dirty Politics

There is no doubt that the source of corruption in India is its rotten politics. If politicians can use black money to get elected, criminals can contest elections and win, and if they can all play vote bank politics, what kind of example do they set for the rest of the country? These days, it seems every political party needs criminals to intimidate the opposition, suppress dissent, and extract rent in order to ensure its hold over power. Under the circumstances, there can be neither raj (rule) nor neeti (ethics) left in rajneeti (politics).

Another way of looking at this sad state of affairs is that many voters perceive the criminal politicians to be more effective in delivering government services. I think, either way, from the supply of criminal politicians to the demand for them, they pose a huge problem for any democracy and its governance.

A Taxing Problem

Ever since Independence, India has had two main problems with taxation—a narrow tax base and significant tax evasion. A narrow tax base means only a small portion of India’s population is paying income taxes. Out of a population of some 1.3 billion people, only about 4 per cent file pay income taxes, which make up the largest part of direct taxes. (page 141)

A country trying to raise adequate tax revenues from a narrow base ends up running large fiscal deficits given increasing government expenditures to meet multiple development objectives. Fiscal deficits in turn hamper economic growth and lead to economic instability through rampant inflation, higher interest rates, or increasing foreign debt. It is the poor who suffer disproportionately.

According to the Centre for Monitoring Indian Economy (CMIE), nearly thirty-one million Indians are unemployed and looking for jobs. While economic growth has been humming along around 7–8 per cent per annum recently, the pace of job creation has been poor. While unemployment is naturally an emotive issue in a country of 1.3 billion people with a young workforce, the capacity to generate jobs is not in the hands of any politician, regardless of their promises. The bottom line is that for unemployment to come down during any period, the number of new jobs created must be greater than the number of people entering the labour market during that period. The problem of employment in India is twofold. First, India needs to invest in more education, vocational training and health. Second, there is a need to shrink the size of the informal sector by helping more workers to switch to jobs in the formal sector.

No Care about Healthcare

Healthcare in India still has a long way to go in terms of access to good facilities and reliable doctors, particularly in smaller towns and villages. While the rich in India can afford to get reasonable treatment at a price they can afford, the poor can’t. The quality of public hospitals is extremely poor and they pose serious risks to the life and well-being of patients. Moreover, the credentials of many doctors are suspect. To make matters worse, there are no independent regulatory bodies to accredit, monitor and disseminate reviews of medical providers.

Grab your copy of this book today to know learn about these barriers in detail and discover how India can find the road to redemption.

The Success of the Successor to Steve Jobs.

Posted on by Penguin India

When it came to picking a successor to Jobs, there were rumors that the Apple board was likely to choose someone from outside the company, but this was never actually the case. The board was Jobs’s board, sometimes controversially so, and they were always going to accept whomever Jobs picked for the role. Jobs wanted an insider who “got” Apple’s culture, and he believed there was no one who fit the bill more perfectly than Tim Cook, the man he had trusted to run Apple in his absence on two previous occasions.

Tim Cook is now the CEO of Apple, and here is how Apple has been doing under his leadership.

Apple has become the world’s first trillion dollar company under his leadership

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Apple is on its way to having a more diverse workforce. Progress is slow, but it’s encouraging to hear that in 2017, half of Apple’s new hires in the United States were from underrepresented groups in tech.

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Apple’s products have received high praise from accessibility advocates. In 2017, the company won three major awards for innovations in accessibility. Being blind shouldn’t be a barrier to using the iPhone, and Apple is working hard to ensure that its products are for everyone.

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Because of Cook’s values, Apple will likely never experience privacy scandals to the same extent that Facebook has.

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Tim Cook has placed a clear emphasis on environmental efforts at Apple. Apple has made world- changing investments in renewable energy, responsible forestry, and sustainable manufacturing.  Apple’s operations now run on 100 percent renewable energy in twenty- fi ve countries, and it’s starting to bring the supply chain along. Apple’s supply chain— which accounts for 70 percent of its carbon footprint— will be 100 percent renewable in a decade or less.

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Aside from big, world- dominating products, Apple under Cook has innovated in many other areas. Apple’s AirPods are a giant hit, and they are remapping the wireless headphone space.

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Apple Pay is slowly taking off and is tipped to become the biggest contactless payment system in the United States; it’s projected to account for a third of all payments by 2022.

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The first major new product category launched under Cook, the Watch was initially greeted with skepticism and even scorn. But three years later, the Apple Watch is the biggest smartwatch on the market and is bigger than the entire Swiss watch industry. Apple is estimated to have sold forty- six million to date. It is likely to develop significantly in coming years.

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Since Cook took over the company, AAPL stock has tripled in value. Some experts attribute the trillion- dollar valuation to the success of the iPhone, the iPhone X especially.

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Apple under Cook has launched a comprehensive set of initiatives, from elementary schools to colleges, to improve the numbers of women and underrepresented minorities going into tech.

Drawing on access with several Apple insiders, Leander Kahney tells the inspiring story of how one man attempted to replace someone irreplaceable, and–through strong, humane leadership, supply chain savvy, and a commitment to his values–succeeded more than anyone had thought possible. Get your copy here!

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