Amazon.com vs. Wal-MartAmazon.com vs. Wal-Mart
E-Commerce Presentation TeamLet’s Get Ready to Rumble!!!!
Let’s Get Ready to Rumble!!!!
•Eric Head•Robert Distefano•Dom Gaudin
•John Lin•Darin Bodin •Carmen Saleh
CEO Jeffrey Bezos
Company Statistics:Company Statistics:
The Amazon Team
Expertise: Expertise: Bits & BytesBits & Bytes
Market Cap: $16 Billion Stock Price: $100 1/16Net Profits: $-138 Million (2Q ‘99)Headquarters: Seattle, Washington
CEO David Glass
Company Statistics:
The Wal-Mart Team
Expertise: Expertise: •Bricks & MortarBricks & Mortar
•Market Cap:Market Cap: $188 Billion$188 Billion•Stock Price:Stock Price: $42 1/4$42 1/4•Net Profit: Net Profit: $4.43 Billion$4.43 Billion•Headquarters:Headquarters: Bentonville, ARBentonville, AR
HISTORIES
History of Amazon.com– July 1994:
• Incorporated• Focus: software development• Sold books in his garage with ten employees
– July 1995: • Virtual doors open
– September 1997:• Introduced personalized recommendations and
one-click purchase
– June 1999:• Obtained 10 million registered customers
History of Amazon.com (continued)
– 2nd quarter 1999 Revenues $314 billion
• 1st quarter 1998 Revenues $87.4 million
• Projected sales for 1999: over $1 billion
– $138 million loss in 2nd quarter 1999
• Has not made a profit since company started
– 10.7 million registered customers
• 8.4 million in 1st quarter 1999
• 3.14 million in 1st quarter 1998
History of Amazon.com (continued)– Operates two international sites:
• www.amazon.co.uk• www.amazon.de
– Other sites operated or owned include:• Gear.com• Drugstore.com• Homegrocer.com• Pets.com• IMDB.com• Planetall.com• Livebid.com• Accept.com
History of Amazon.com (continued)
Mission: To be the world’s most consumer-centric company where people can find and discover anything that they want to buy online.
1962 Company founded in Rogers, Arkansas
1969 Wal-Mart Incorporated
1970 Wal-Mart Goes Public
1979 First Billion Dollar Sales Year
1993 First Billion Dollar Sales Week!
History of Wal-Mart
1988 David Glass named CEO
1991 Established International Presence in Mexico
1995 Established Presence in South America
1996 Entered Asia
History of Wal-Mart (continued)
1997 Largest national employer with 680,000 associates
and first $100 Billion sales year!
History of Wal-Mart (continued)– Originally launched Website in 1996– Owns six registered web addresses:
• samsclub.com • w-mtour.com• samsclubtravel.com.
– Has established alliances with: • Fingerhut• Books-A-Million
– Announced plans for an Internet megasite in 1999!!!
STRENGTHS
Amazon’s Strengths
–E-commerce is its core mission and environment
–Amazon.com has enjoyed a first mover advantage
–Amazon has:
•a strong brand image
•vast customer database
•exceptional customer trust
Amazon’s Strengths
–Amazon provides:
•100% guaranteed secured credit card transactions
•Personalized product recommendations
•Hassle-free shopping through 1-click and 1-bid technology
•Risk-free return policy
–Amazon’s IT and Logistics executives were formerly employed at Wal-Mart
Wal-Mart’s Strengths
– A leader in almost every retail category
– $137.6 billion in sales last year
– $4.43 billion in net earnings
– Excellent vendor alliances
Wal-Mart’s Strengths (continued)
-History and image as a discount retailer
-State of the art supply chain network
-Culture of customer service
-More than 3700 stores worldwide can be used in a “hybrid strategy”
WEAKNESSES
Amazon’s Weaknesses
— Amazon has yet to achieve a profit
—Customers cannot physically touch the product prior to purchasing
—Lack of social interaction before purchasing
—Risk-averse consumers may find buying on-line intimidating
—Not every person has access to the Internet
Wal-Mart’s Weaknesses
– Brand image not attractive to “upscale consumers”
– High fixed costs
– First Web launch was not very successful
– Will a mature and successful firm be willing to make the necessary commitment?!
OPPORTUNITIES
Amazon’s Opportunities
–Expand internationally
–Actively pursue online auctions
–Evolution of mass market from merchant-centric to consumer-centric
Amazon’s Opportunities (continued)–Create “segment fluidity”
•Segments within segments
•Typical segments
–Low cost/value/high quality
•Embedded segments–Customer service
–Product uniqueness
–Social experience
–Quick and easy purchase
–Personalized recommendations
•Catch customers with high attention scarcity
Wal-Mart’s Opportunities
– Exploit vendor relationships
– Establish strategic alliances
– Explore hybrid models to enhance customer service
– Spin off wal-mart.com as a separate IPO
Wal-Mart’s Opportunities (continued)
– Market aggressively using traditional and online media
– Explore hybrid models to enhance customer service
– Do not worry about cannibalization. Use the Internet to expand customer base
THREATS
Amazon’s Threats
– The future of E-Commerce
– Amazon may bite off more than it can chew(over-diversification)
– Other retailers are quickly creating an on-line presence
– Amazon must effectively manage its growth to minimize growing pains
Wal-Mart’s Threats
– Wal-Mart is NOT the first mover. The “wait and see” strategy could be problematic
– Other retailers are getting into the game (Sears, Target, Kmart, etc.)
– Establishing an online brand will cost….the longer the wait, the greater the cost!!
CONCLUSION
Prediction: NO ONE WINNER!
– The Hybrid Model
– Segment “Fluidity” - Attention Scarcity
– Bits & Bytes vs. Bricks & Mortar Analysis
Questions??
