"Walmart wants to beat Amazon at its own game"

 

That's the title of an article at Freightwaves.

Well aware of the storm clouds brewing on the macroeconomic horizon, Walmart is doubling down on its supply chain-led transformation into an omnichannel retailer with an integrated, flexible and intelligent distribution and fulfillment network.

. . .

Revenue headwinds are due to the stress that inflation is putting on the American consumer, stress that Walmart management has observed and commented upon. Higher-income shoppers are choosing to go to Walmart; general merchandise sales gave way to daily essential “consumables”; and in grocery, private label growth beat out the name brands. 

Walmart management believes there are (at least) two big ways that supply chain investments can address the overall business environment. First, for Walmart, supply chain has always been a place of experimentation, where small investments that have proven to generate operating leverage can then be scaled. Second, e-commerce is the fastest part of Walmart’s business — growing 17% y/y in the fourth quarter — and connecting all of its inventory and rationalizing its network helps power that growth.

. . .

Walmart U.S. CEO and President John Furner explained the evolution of the company’s supply chains.

“When Walmart started, customers came to stores, and they bought general merchandise and consumables,” Furner said. “So we built an ambient supply chain that served stores. As our store footprint grew, that network grew. When we added grocery and supercenters, we built a perishable supply chain — with buildings to handle cold and frozen items. That one also serviced stores. Then came e-commerce. So we built another fulfillment network and partnered with carriers to move products from FCs to customers’ homes. And we layered in pickup and delivery too — from our stores. 

“We got by serving customers with these resources … but they weren’t connected. They operated in parallel, and they weren’t flexible. They were each effective at completing the task they were built to perform. Now that’s changing. We’ve reengineered our supply chain networks to connect all the assets we have,” Furner said.

There's more at the link.

I have to say, I'm growing more and more frustrated and disappointed at Amazon's performance in terms of customer satisfaction.  Examples:

• Prime membership was sold on the basis of free delivery of one's orders within two business days.  Nowadays, an increasing number of items are taking three, or four, or five business days to arrive.  That being the case, why pay for Prime?  I don't need any of the other extras it offers.
• One used to be able to order items overnight, for an extra charge.  I haven't seen that offered by Amazon for a year or more.  If you want it faster, Amazon won't oblige.
• Amazon is trying to pressure its customers to choose an "Amazon delivery day" every week, so that all one's orders are delivered together.  That flies in the face of the two-business-day convenience that Prime originally offered.  It's very much to Amazon's advantage, but not for its customers.
• I've noticed an increase in the number of Amazon orders that are "delayed in transit" or just plain lost.  I have no idea why that's happening, because the packages are out of Amazon's hands at that point:  but it's happening far more often with Amazon packages than those from other vendors.
• Amazon seems to operate on a knee-jerk response of "if an item becomes popular, charge more for it".  For example, last week, I recommended a small fixed-blade knife as a good deal.  A lot of you responded, and bought one or more.  Within a day or two, the price went up by 25%, from $11.99 to $14.99, at which level it remains at the time of writing.  That's not the first time I've seen that, after I've reviewed something and readers have bought it in large quantities.  That's not customer-friendly at all.

Walmart, on the other hand, has been making big improvements in its online customer service.  I've now gotten to the point that I'll shop there for preference, because they'll often deliver within a day (never mind two), and their prices are frequently better than Amazon's for the same or similar products.  Example:  I cooked for a dozen members of the North Texas Troublemakers last weekend, and made a giant-size seafood paella.  I needed a very large pan for it, and found what I needed at Walmart for a few dollars cheaper than an equivalent product at Amazon.  The pan wasn't in stock at a local store, but Walmart's Plus service delivered it overnight at no extra charge, whereas Amazon would only have delivered it yesterday, too late for the weekend.  Guess where I spent my money?

Jeff Bezos used to warn his staff that Amazon could always be overtaken and dethroned as leader in the online shopping business if a leaner, hungrier rival came on the scene.  I don't think he envisioned Walmart as that rival, but from where I'm sitting, I don't know that Amazon Prime is worth having any longer.  There are now cheaper, faster alternatives.  I may not renew it when it comes due later this year.

What do you think, readers?  What's been your experience with Amazon and its rivals?  I'm interested in the subject because with the economy overall in such trouble, it's going to take real innovation and determination to stay on top of the heap.  I'd thought Walmart was old-school and wouldn't be able to cope with the new environment, but it looks like they're making the right decisions and putting management muscle behind them.  Can Amazon match them and bounce back?

Peter