Monday, October 16, 2017

Is Amazon.com becoming complacent, and resting on its laurels?


I was intrigued to read this article by Karl Denninger.

Walmart has said they expect a 40% e-commerce increase (in dollar terms) over the next 12 months.

Here's my view on them vis-a-vis Out-Amazoning Amazon: Amazon is in trouble.  Serious trouble.

WalMart has done a lot with their online presence of late.  Further, and far more importantly, they do not charge a "subscription fee" for some "premium" tier such as Amazon does with Prime.

Why is this important?  Several reasons:

  • Walmart now handily beats Amazon for a lot of products when it comes to price.  In fact if you don't check Walmart's online listing before ordering from Amazon you are a fool and almost-certain to overpay.  It's that blatant now, and has been getting more-so over the last few months.
  • You need buy no special plan to get free delivery.  You can, as with Amazon, get free delivery to your house if you have a modest amount spent in one transaction.  However, you can also get free delivery to any of WalMart's stores irrespective of the amount of the transaction and typically the product is there in 2-3 days -- in other words, just as fast as PRIME.  WalMart will hold it at their customer service desk for about a week and you can come get it at your leisure.
. . .

Next up Walmart has announced that they intend to make returns of their internet purchases zero hassle (requiring just seconds) at any of their stores.  That's a huge win over returning something via Amazon where you typically have to go to a UPS retail outlet or similar to drop it off and deal with printing their return label.  In this case just take it with you the next time you go to Walmart, check it back in at the store and it's done.

There's more at the link.

On Sunday morning, I was researching the purchase of some home gym equipment to supplement the strength training that Miss D. and I are currently doing.  After reading Mr. Denninger's article, I decided to do a direct, like-for-like price comparison between Walmart and Amazon (same equipment, same manufacturer, same model, just a different vendor).  To my astonishment, Walmart had the cheapest price every time - and it wasn't a small difference, either.  Across six different products that I wanted, Amazon and/or its third-party vendors averaged 258% - i.e. two and a half times - more than the prices at Walmart.  That's astonishing!  Admittedly, this was for relatively expensive specialty items, not "normal" shopping like groceries or clothing;  but even so, that sort of difference in price is mind-boggling.  What's more, Walmart offered the same free shipping I'd receive from Amazon.  In addition, it was far cheaper than every other online retailer I could find selling the same make and model of equipment - many of whom would have charged shipping and handling fees on top of their retail prices.

Needless to say, I dug out my credit card and ordered what I needed from Walmart without further delay, for about $450 less than Amazon would have charged me for the same goods.  I'll be able to pick up my order at my local Walmart on Thursday.  It's nice to know it'll be held securely for me;  I don't have to worry about someone stealing it from my front porch (which has happened in the past, in other towns).  That's a definite plus.

After that experiment, you can bet I'm going to be much more diligent about price comparisons between online vendors in future.  Amazon has done a wonderful job of making online transactions as easy and painless as possible.  Where the difference in price is very small, I'll probably opt for the convenience of using their tried and trusted services, rather than open accounts at more vendors.  However, when buying more expensive items, the kind of savings I've just enjoyed have been a real eye-opener.  I suspect Amazon has been "coasting", resting on their (well-earned) laurels for customer service, trusting that clients will value that so highly that they won't bother to check prices elsewhere.  For me, that's just come to a grinding halt!  I only have so many dollars to spend.  If I can stretch them further by taking a bit more time and trouble, so much the better.  I'll use Amazon to check user reviews of products I'm considering (it's still by far the best online resource for that), but I'll check prices elsewhere, too, and "follow the money" in terms of savings.

Kudos to Walmart for putting so much effort into improving its online ordering process, which is noticeably easier to use than it was in the past.  They've definitely upped their game.  If their handling of my order is equally good, they're going to become an e-commerce force to be reckoned with.  I think Amazon is going to have to work very hard to maintain its current leadership position.

(For another perspective on the e-commerce rivalry between the two behemoths, see "The Amazon-Walmart Showdown That Explains the Modern Economy".  It's a good article, and worth reading.)

Peter

17 comments:

bart simpsonson said...

I wonder if products purchased on Walmart.com, but supplied by third party vendors on the site will be all that easy to return, having also been shipped by said vendors, and not by Walmart. Amazon is a hassle on returns, in my experience. The prime membership does however, offer streaming video possibilities that take at least some of the $ting out of that prime membership cost. Keep up the good work Peter, yours is one of the first sites I check out daily.

hightecrebel said...

The issue with Wal-Mart is that it just cancels orders a few hours after they're put in for some people. I've tried ordering everything from fishing poles to cat litter, and between three and six hours after ordering I get an email confirming cancellation.

Dorsal Spine said...

Be very careful in comparing model numbers particularly on electronics. Walmart often has special models built to their specifications that are not as good as similar models from the same manufacturer.

Steve Sky said...

The other thing you need to be aware of with Walmart is the 'lesser' product is riding on the reputation of the 'greater' product. For example: you see a Samsung HD TV, model number HD205 and it has great reviews no matter which blog you read. Online, you can get it for $1000 (example). So you look at Walmart, and WOWeee, it's $750 at Walmartfor the "same" TV, model number HD207u.
You get it home, and it has some noise in the picture, and finally dies a month past the warranty, causing you to wonder why it was so highly rated in the blog posts. But you didn't purchase the highly regarded TV, you got the knock-off, with the 'u' on the model number, to slide by on the reputation of the *real* HD TV.

Walmart has done this many times, and if you want to read a real-world example that didn't happen, read the John Deere's story, where the CEO turned down Walmart.

The problem with doing business like this, riding on the reputation of the real product is eventually, people begin to say, "well, they were good once, but now...", and you go out of business. And Walmart finds another supplier. However, if you buy it knowing it'll fail/break on you, "but you only will need it once", it can save you money. Harbor Freight has a similar reputation for its' tools, but I've bought from them for tools that I only needed for a specific job, expecting them not to last.

Jeff Weimer said...

I usually start at Amazon, just to get a price to compare. It certainly pays to shop around, Amazon has never consistently had the best prices on any given item.

There are a number of apps and extensions that do the comparison shopping for you. I have Wikibuy and Honey, and they suss out better prices while you are shopping on Amazon and put them on the page right next to the Amazon price so you can't miss it.

Elizabeth said...

I would be interested in a followup to this, especially how the equipment quality stacks up.

Ray said...

Amazon still does not need to make a profit. Amazon is willing to take risks and accept failures as the cost of doing business. They just started accepting returns at Kohl’s. And having a prime option for ebt users. The efficiency of their warehouses is mind blowing - watch the videos on YouTube.

I hope Wal-Mart becomes more competitive.

Anonymous said...

Amazon employs "dynamic pricing" where their computer algorythms adjust pricing on items constantly. To demonstrate, if you have an Amazon account put a dozen or so items in your shopping cart and mark them "save for later." Everytime you open your cart you'll be greeted by a dialog box announcing "X items in your cart have changed price." Sometimes the prices change by a penny, sometimes by dollars (sometimes it gets funny - I had a can of spray foam sealant in my cart which went from $5.62 one day to $479.00 the next, back to $5.62 the next day, then back to $479 again that evening).

If you use Amazon's Subscribe and Save feature, pay close attention to the item pricing on your S&S order close date - those prices fluctuate wildly, too. The toilet paper you paid $6.85 for last month may be $8.50 this cycle. If you just "set it and forget it" month after month you're probably getting screwed.

All of which means Amazon absolutely, positively cannot be trusted on price. Ever.

www.camelcamelcamel.com will give you the last several years of Amazon pricing on an item - copy the Amazon item URL, paste it into the camel search box, look at the chart.

There are a few price comparison web sites that will compare Amazon's price to everyone else's (never telling you, of course, who the "everyone elses" are), which makes me strongly suspect they are fake web sites run by Amazon.

Denninger is right - buying blindly from Amazon is a fool's errand. Some of their pricing is good, but how much time and effort do you want to expend to make sure you aren't getting ripped off?

Peter said...

@Steve Sky: In this case, the products are dumbbell and curl bars, plus a selection of weights and a weight rack. Hardly high-tech, and there's no technology whatsoever - just lots of heavy iron and steel! I don't think there'll be any problems with technological obsolescence . . .

:-)

freddie said...

Good to know and timely, as I've been shopping on AZM for unfinished wood furniture.

Borepatch said...

I've had good luck with Walmart the last year or so, but have noticed that they do not know when deliveries are going to be made. Amazon's delivery date estimates are always more reliable. I expect that this sort of supply/distribution chain visibility will improve over time.

Sherm said...

I sorta did this last Saturday. I stood in the store, Shiptons Big R in this case, checked their price against amazon and saved money and time. Amazon simply confirmed I was getting a fair price. Amazon is normally the highest vendor for ham radio equipment too. I know if I can't find a better price elsewhere I'm not trying.

I often use the amazon shopping cart to remind myself of items I want to buy eventually. I've got 38 items saved for later. When I find an attractive price and don't need the reminder any longer, I'll delete them from my cart.

Will said...

Peter,
"...there's no technology whatsoever - just lots of heavy iron and steel!"

And you think the Chinese (most likely source for such items) can't figure out a way to fiddle with that? Bwahahahahah!!!

Steve Guy is correct on the model number designations at WalMart. They used to designate it with a "wm" suffix, but that code may have changed by now.

Sendarius said...

A lot of the stores here in Oz have a "find it cheaper elsewhere, and we'll price match and pay you for the privilege" policy.

They avoid paying out by specifying "an identical, stocked item", and then pulling that "the model number is different" trick.

The exact same electronic product from say, Samsung, can be found with six subtly different model numbers within a few kilometres of home.

Alex said...

We have never found an item that was actually cheaper on Walmart.com than on Amazon... We always find it cheaper at Amazon or toysrus. But we are mainly buying toys for presents...

Will said...

Sendarius,

"The exact same electronic product from say, Samsung, can be found with six subtly different model numbers within a few kilometres of home."

IIRC, this is termed "Boutique Production". Just when the US was getting caught up with the Japanese' JIT methods, they moved to this, which consists of smaller groups of workers who do a more complex assembly routine. This enables the maker to quickly add or change details of a product to suit the buyer, thus allowing "customizing" for each retailer that wants their own version of a popular product. The resulting model numbers may have been the original intent, or just a happy dividend for retailers. I don't recall any discussion of that.

Post Alley Crackpot said...

"British Walmart" (aka Asda) has had this "collect in store" service for a while now, especially for groceries. Waitrose, Sainsbury's, Tesco, and Morrison's all have it, and some of them have been rolling out Amazon-style lockers for online orders.

The demand is high enough that you can "click and collect" a lot of things you might not otherwise expect, such as foreign currency from John Lewis to be collected at certain Waitrose locations.

I know this might be a bit of a stunner, but it's nice to see that the US is finally coming up to British levels of customer service. :-)