Retail has had distinct phases of physical and digital growth over the last two decades, at each phase experts prophesy the growth of retail innovation as a digital transformation. While this is true, retail in nature will always have one foot in the physical and one foot in the digital. The Amazon and Walmart retail race is the perfect leading indicator of the industry’s dynamic. Over the last few years, Amazon and Walmart have continually innovated to increase their presence in either field, with Amazon taking the lead in digital and Walmart setting the precedent for Amazon’s aspirations in physical retail.
As Amazon pushed into high-speed convenience focused physical stores when it launched Amazon Go, Walmart focused on increasing its digital footprint. The biggest difference between Walmart and Amazon’s digital offerings was Walmart’s traditional model vs Amazon’s digital native marketplace that allowed the easy on-boarding of 3rd party sellers. Mid-June, Walmart announced a partnership with Shopify that would change this. Hoping to add up to 1,200 small businesses to its own marketplace by the end of the year, Walmart boasted 120 million monthly visitors for the small businesses to tap into. The pandemic offered the perfect springboard for this transition as Walmart’s e-commerce business grew 74% in the first quarter of 2020. Now after two-quarters Walmart has already added more than 15,000 new sellers and has a total seller count double of what it had at the same time last year.
While Amazon continues to lead seller count at a breakneck pace, adding thousands of sellers daily, Walmart sticks to a more stringent approval process that seeks to ensure quality while avoiding counterfeit issues. We’ve previously talked about Amazon’s digital lessons in the physical retail world, here we can see Walmart porting over its traditional lessons to the digital world of retail. In 2018, a year after Amazon’s acquisition of Whole Foods its sales were reported around $20 billion for groceries across Whole Foods, Amazon Fresh and Amazon Prime Now. The same year Walmart reported $270 billion holding onto its title as the world’s largest grocer. Walmart’s physical footprint rivals Amazon’s digital presence, with 90% of Americans living within 10 miles of a Walmart Store. What’s obvious from this is that retail is never going to be a digital only play – Amazon and Walmart have perhaps been the most aware of this from the get-go.
As Walmart uses a digital native avenue like Shopify to bolster its digital offering we will continue seeing Amazon make moves on Walmart’s home ground as well. Innovation on both fronts then becomes a prerequisite for market-leading competition. What’s interesting is that following a surge in online shopping and Walmart’s merging of its grocery app with its marketplace it has actually outperformed Amazon on seller performance to become the Iphone’s number one shopping app.