Amazon vs Walmart: Clash of business models

• Main Authors: KUMAR, Nirmalya, MITTAL, Sheetal
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2023
• Subjects: distribution channels; Omni-channel; supply chain management; Digital Transformation; business models; e-commerce; E-Commerce; Operations and Supply Chain Management; Strategic Management Policy
• Online Access: https://ink.library.smu.edu.sg/cases_coll_all/437; https://smu.sharepoint.com/sites/admin/CMP/cases/SMU-22-BATCH%20%5BPDF-Pic%5D/SMU-22-0021%20%5BAmazon%20Vs%20Walmart%5D/SMU-22-0021%20%5BAmazon%20Vs%20Walmart%5D.pdf?CT=1675045377249&OR=ItemsView
• Institution: Singapore Management University

Set in 2021, this case describes how Amazon and Walmart have been two of the most successful retailers in history and are responsible for changing the rules of the game in the retail industry in the US. Over the years, the two firms had perfected contrasting business models to enable their dominance on the respective offline and online retailing. Walmart’s model of low prices and strategic partnerships with suppliers had redefined supply chain practices and lowered system costs through the adoption of information technology. Amazon’s online model of convenience of shopping from anywhere, anytime comprised a high-quality user-friendly platform with a large product catalogue, and a widespread and reliable fulfilment infrastructure to deliver the orders quickly to the shopper. In recent years, the growing customer preference for omni-channel retailing, an integrated experience that seamlessly comprised digital and physical retail, had compelled the two companies to make substantive investments in developing capabilities and acquiring resources in what was hitherto the other’s domain. This leads to several questions that engage students. With Walmart and Amazon racing to add online and offline retail respectively, would their distinctive business models morph to become similar to each other? Or should each focus on its core strength, while offering the other service (online for Walmart and offline for Amazon) as complementary? Were online and offline retail more suited to different customers and product categories? And did their respective future prospects truly justify the dramatic difference in market capitalisation between the two retailers? The case will help students appreciate the differences between the value proposition of online versus offline retail, and the distinctive capabilities and resources required for each business model. They will be able to explore the strategies pursued by each retailer to adopt an integrated retail model and analyse the challenges faced in the process. The case can also be used to contrast the product-driven competitive strategy model of Walmart versus the platform model adopted by Amazon.