Giants amongst giants, Amazon and Walmart are in combat for our dollars, euros and yuans online. Walmart is deeply entrenched in its brick and mortar stores, while Amazon, as the master and commander of e-commerce, has laid claim to the planet’s biggest chunk of virtual retail real estate. Now, Walmart wants more online customers and has been developing innovative e-strategies to curtail Amazon’s encroachment on its sales. The company’s e-commerce sales are growing to record numbers, as they are on track to do $9 billion this year; despite this growth, Amazon will still outsell them online 7 to 1 with sales projected to exceed $65 billion this year.
This war’s main battlefield is right here in America, where Walmart has deployed its largest weapon: 4,000 stores. The logistic advantage that Walmart plans to levy over Amazon focuses on two non-tech aspects of the online business: same-day delivery and in-store pickup. As a matter of fact, both of these customer service features are becoming all the rage amongst e-retailers everywhere. Allowing online customers to come by the store to pick up their orders is a big differentiator to Amazon’s model so far. From our own experience in auto parts, we know very well that pickups are less expensive than deliveries, and it is here where Walmart can flex its muscles with its gargantuan, countrywide store presence.
Amazon, however, is not sitting by idly. They just launched a strategy to set up pickup locations as well. This will work in the form of conveniently-located lockers inside places customers flock to, like drug stores and convenience stores; albeit, these are only available in a few cities. Now Amazon customers can pick up their online orders the same day they place them. But the strategy is truly limited when compared to Walmart. There are only a handful of locker locations, only items that can fit in the lockers are eligible, locker space is limited, and customers have a short window of a just a few days to pick up their order or risk cancellation. There is no doubt that some online consumers could benefit from this plan, but not all.
The real opportunity for mano-a-mano combat comes from same-day delivery. Both of these companies are in a mad dash to figure out a way to deliver orders the same-day consumers click through the virtual checkout on their online carts. Regarding this skirmish, other well-known players like Google and eBay are also developing schemes for same-day strategies in an all-out battle to conquer, retain and augment customers.
Since its inception, Amazon has been very careful about selecting the location of its distribution centers to avoid having to collect sales taxes. This gives Amazon’s customers a reprieve from the sales taxes they face at brick and mortar stores. Coincidentally, the country’s fiscal fallout has forced many state governments to go after Amazon to collect sales taxes on items being ship to their citizens.
For a long time, Amazon fought every legal battle to avoid becoming a de facto nationwide sales tax collector; but, the writing was on the proverbial wall and now it seems Amazon’s strategies have changed. In California, Amazon abandoned its repeal campaign in state courts and swiftly flipped to signing an agreement with lawmakers to collect taxes on its behalf. Many believe this points to Amazon’s plan to set up as many distribution centers as needed, regardless of sales tax consequences, in order to accumulate product close to the customers, thus making same-day delivery possible to as many as possible.
As we all know from running auto parts deliveries every day, delivering is an extremely costly proposition; still, we are all trying to find more customers to deliver to. At Advance Auto Parts, they are offering auto parts home deliveries within the day to do-it-yourselfers who are more than happy to “click and wait” than “drive and get.” Perhaps Walmart might come up with the most innovative weapon in this battle after all, with its recently proposed idea of tapping their customers visiting their stores with delivering online orders placed by other customers!
In a radical plan, Walmart will ask some of its customers to sign up to deliver online orders in exchange for discounts on the stuff they came to the store to buy; customers will drop the online orders off on their way back to their homes. Walmart achieves economies of scale that will be hard to top by any other competitor. This is just an idea and it has not even been tested yet, but it’s easy to see how Walmart will be highly motivated to deploy such a low-cost delivery alternative.
To us, there is nothing new about same-day deliveries and in-store pickup. Who would have thought that such standard features of the auto parts business will now be the new battlefields for e-commerce? For years, we have been delivering parts on the same day they are ordered, several times a day, actually, with our hotshot routes that get parts to customers in less than 30 minutes! To accomplish this level of service, we have been accumulating auto parts in warehouses and stores located as close as possible to our customers, regardless of sales tax or any other regulatory consequences. We have been doing this since before the dawn of the Internet. Clearly, we are the experts on providing such services; now the trick is to make sure we leverage our expertise in these areas to retain our customers and grow our business.
Mandy Aguilar is a regional vice president for Jacksonville, Fla.-based The Parts House.
Visit Mandy’s blog: www.mandyaguilar.com
