Case Summary

The case depicts a representation of the highly competitive grocery market of the US and the activities of
its market giants like- Amazon, Walmart, and Whole Foods, etc. After being successful in e-commerce,
Amazon bought another food market chain Whole Foods for $13.7 billion and sending messages to its
market rivals. Amazon rushed to utilize Whole Foods as warehouse depots and also launched cohesive
programs like- making available Whole Foods’ loyalty program at AmazonFresh and integrating their
point-of-sale systems to enable more of Amazon’s brands to be available at Whole Foods, and vice versa.
In retaliation, the US leading seller of groceries Walmart with Sam’s Club decided to respond to Amazon’s
entry into the market, and also they were keen to increase their online grocery market. Walmart had to
act decisively because of Amazon’s leading position in the e-commerce business and they knew needless
to say that If Walmart lost the grocery battle to Amazon, they would have no chance of ever overtaking
Amazon. Continuing big battles between key players, the other medium or small industry players like-
Costco, Kroger and Dollar General Etc. have to suffer most and the coming next days will be more intense
competition due to new entrants to the market.

Question-Answer
1. Analyze Amazon.com and Walmart using the value chain and competitive forces
models.
 Competitive Forces:
I. Amazon was already the market skipper in terms of e-commerce activities whereas
Walmart was controlling the grocery market as the largest retailer company. Then,
Walmart decided to enter into a new market through their entry into the online retail
space, contending straightforwardly with online retailer giant Amazon. Till then Walmart
has been centered on physical stores for the bulk of their existence and online retail
capabilities solely became a priority once Amazon began stealing its market share. Where
Amazon surpasses the most is their variety of merchandise and many price tags, giving
different kinds of buyers’ different kinds of options. However, Walmart is stuck to the
confines of its physical stores, and their online shopping is in its premature stage while
Amazon has been around for some time.
II. Both Amazon and Walmart are inventing alternative services by providing unique service
or product facilities to their competitor for their customers. For this, numerous Walmart
shoppers are additionally Amazon clients, and the capacity for clients to buy comparative
merchandise at comparative costs at both Amazon and Walmart puts seriously buying
power in the consumer’s hands, drives down costs, and forces both entities to form
technological and operational changes to extend their competitive advantages.
III. Each Amazon and Walmart have incredible leverage over their suppliers because of the
expansiveness of their stock for comparative items. This enables them both the power to
drive down the prices they buy for their suppliers’ products to then offer the savings to
their customers.

 Value Chain:
I. Inbound and Outbound Logistics- Both Walmart and Amazon build warehouses on the
brink of their target customers to store products. Where the two organizations contrast
 is in their outbound circulation. Amazon’s core business is in storing products at
fulfillment centers to ship to customers or acting as a technological middleman for 3rd
party vendors who want to sell their products to quite a good number of consumers.
Walmart is quickly building up their online abilities but remains much smaller than
Amazon in online market capitalization and in this manner also less proficient in door-
delivery distribution. Through Amazon Prime, for instance, customers are able to receive
shipments inexpensively and within short days. Walmart is slightly costlier, and their
shipping takes a few more days. However, Walmart offers customers instant gratification
and therefore the lowest costs by the method of the dimensions of their services and
therefore the availability of all their products in several physical stores.
II. Sales and Marketing- Walmart has constructed a retail empire referred to as the spot for
providing cheap prices on several popular items. Thus, they can afford to lose money on
certain products expecting to form up the profit on others with greater scale and margins.
Walmart is additionally increasing its investments in technology, buying up e-commerce
startups in order to direct more traffic and awareness to its online channel, giving its
customers the power to purchase merchandise in much bigger quantities for larger
discounts, and using web scraping techniques to identify when competitors are offering
lower prices on a product so that their own prices can be automatically lowered. On the
other hand, Amazon has invested heavily in facial and product recognition through
camera applications in order to identify products that customers snap pictures to find on
their website. In short, Amazon features a strong network of consistent devices like the
Firefly that enables customers to view their e-books and interact with other online
content and purchases they’ve made. However, clearly, we find that each company has
its own unique strong zone such as- Amazon in e-commerce distribution and quick
delivery, and Walmart in physical presence, instant satisfaction, and inexpensive pricing.
So, in the long run, the winner will be decided by whichever company makes the most
effective business choices in terms of their competitive advantage.

2. Compare the role of grocery sales in Amazon and Walmart’s business strategies.
 Amazon- Amazon, and Walmart are in the product storage, marketing, and distribution
business, with each having upper hands in the business. Amazon is the largest player focused
on pure e-commerce, storing products in large fulfillment centers for distribution to the doors
of their customers within a brief timeframe. They conduct mainly indirect shipment, and as a
result, have the foremost efficient and cost-effective sorts of distribution in e-commerce.
Shipment times are often within hours in certain cases and are often very inexpensive with a
subscription. Amazon has invested heavily in technology applications and devices such as-
Kindle that allow their customers to view their e-books and other pieces of software. This
lends an excellent complementary element to much of their material and greater channels
for the profitable exchange of products.
 Walmart- Walmart is investing within the technology game also, realizing the threat that
Amazon poses to their core business model of physical warehouses that double as
department and grocery stores. Their legacy has been enormous product choice at the most
cost-effective prices. So as to compete with Amazon, Walmart has invested in a number of
interesting technologies to create upon their unique value of instant gratification at a much
 cheaper price. Moving on the part of offering more products online to stand against directly
with Amazon’s capabilities, but because their infrastructure was created for a different
purpose, they will never be able to take over the e-commerce giant.
 Each organization is multiplying down on its upper hands to get more business, hold the piece
of the pie of their center clients, and achieve their piece of the overall industry. The winner
of this free-market battle will be the company that adequately use its favorable circumstances
to the widest possible audience.

3. What role does information technology play in these strategies?

 Recently, Walmart has started to use IT to expand into Amazon’s core business of e-
commerce, recognizing the need to offer customers an online marketplace, since 50% of
Walmart’s customers now use Amazon for some of their purchases. They've likewise made
some brilliant application buys, purchasing innovation that reinforces their upper hands in
instant satisfaction and ease of payment. For instance, they’ve given customers the power to
buy products online and pick them up in-store, scan products before paying for
straightforward and quick check-out, and add products to their cart and pay with cash. As a
business with a core strategy of offering low prices for instant gratification, Walmart is using
technology to double down on its strengths and expand to take market share from Amazon.
 While Walmart ventures into Amazon's area of internet business, Amazon has been
consistently taking a piece of the pie from Walmart by opening up their business to more
outsider sellers and utilizing innovation to generate a significant number of the buys their
clients make. Such an ideal example can be shown like- their growing investment in trending
apps or devices like the Kindle that allows their consumers to purchase and view e-books. This
type of smart move saves Amazon considerable space and cost by reducing the number of
physical books they must keep on hand while retaining most of the sale price. Amazon is
additionally investing heavily in delivering speedy and cost-efficient ways of delivering their
products. Among them, a fabulous example can be shown like their investment into drone-
delivery technology is promising to deliver packages from their fulfillment centers during a
30-minute timeframe. This type of unique and advanced steps will fortify their core in the
speedy and proficient delivery of the product for consumers who wouldn't think second time
booking items online and have them conveyed to their doorstep.

4. Which company is more likely to dominate grocery retailing? Explain your answer.
 Back in 2016-17, it would be difficult to answer this question. Thanks to recent data and
insights, it’s absolutely clear that in the long run Amazon will be the winner and it has already
curbed a significant amount of share of Walmart. Apparently, this corona pandemic situation
has given many advantages to Amazon because of its predominant presence in the online
retail market. It’s very easy to mention Amazon as the market skipper due to its magnificence
presence online and a loyal fan base starting from kids to grandparents purchasing things
regularly. Not to mention their selection in products and costs, their Amazon Prime services
that include Prime Video, Music and lots of discounts on products, Kindle and partnerships
with many products that want to require advantage of Amazon’s online market and now
Whole Foods. Amazon is simply one big online store at the touch of your fingertips, with goods
delivered to your door within 1-2 business days. So precisely, Amazon can continue its ruling
in grocery retailing. But that’s to not say that Walmart can’t compete, they need the potential.
 Many older generations would much rather like better to buy their groceries from Walmart
instead of the corporate that delivers books to their door. If Walmart can somehow captivate
that generation into purchasing online, they can surely have a competitive edge against
Amazon, especially with the presence of their physical stores. Still, I believe that it is too early
in their battle to determine who the likely winner is. The ultimate victor will be the company
that makes the best strategic decisions in using technology to attract and retain customers.

Reference:
https://www.entrepreneur.com/article/345170#:~:text=Amazon%20wants%20to%20take%20over,to%2
0be%20benefiting%20them%20online.

https://www.forbes.com/sites/jeanmarcfrancois/2020/01/15/amazon-vs-walmart-the-next-decade-will-
decide-which-comes-out-on-top/?sh=7ec1b6494403