Trying to keep track of the competition between Walmart and Amazon is more like watching a hockey game than a tennis match. Things happen quickly, in every direction. You can’t look away for an instant.
In perhaps the two latest developments, Walmart is opening its online platform to foreign sellers, just as Amazon is kicking thousands off its site for diddling with the reviews. Meanwhile, Amazon is opening stores – real stores, in actual buildings – to bring things pretty much full circle.
Walmart, which of course started out with real stores and added its online site a few decades later, reports that its online marketplace doubled in size over 12 months to reach 500,000 sellers. That’s still way behind Amazon with about 1.5 million active sellers but closing in on eBay, a solid second with about 790,000.
Perhaps most ominously, in July, 15% of Walmart’s new sellers were from China, according to the research firm Marketplace Pulse, which reports that Walmart will soon be adding 1,000 sellers from China monthly.
It was Chinese sellers that got Amazon’s goat and led it to abruptly remove 50,000 sellers accused of using “pay-for-praise” tactics to motivate customers to write good reviews about their products.
Walmart has reviews too, of course, so consumers might want to keep an eye out for products whose reviews start to seem just a little too good to be true.
Amazon gets physical
With all this online jousting, it would have been easy to miss the news that Amazon is rolling out its own chain of brick-and-mortar stores, where you’ll be able to buy many of the things featured on its site, return items, pick up orders and so forth.
While this might seem surprising, it shouldn’t. As author Stephen Mihm points out in a fascinating Bloomberg article, it’s deja vu all over again. Who else do we know who started out as a catalog merchant and gradually transitioned to also dominate retail marketing on the ground?
That’s right – our old friends, Montgomery Ward and Sears-Roebuck.
Back in 1872, Aaron Montgomery Ward sent out a catalog to rural customers who faced high prices and limited selections in their local stores. Like Amazon 130 or so years later, he relied on the post office to deliver the goods, thus cutting personnel, rent and inventory costs to the bone. Richard Sears and Alvah Roebuck were close behind with their catalog business.
But after a while, it became apparent that catalog sales alone couldn’t achieve the total market domination every good capitalist wants and in the 1920s, the companies began opening – you guessed it – stores.
To everything, someone once said, there is a season and every company seems to have a natural lifespan, something Amazon chieftain Jeff Bezos occasionally points out. Montgomery Ward and Sears Roebuck grew stodgy and their catalogs seemed like old hat.
Amazon modified the catalog business to an online model and the rest of the story you already know. Now we get to watch what happens in the next chapter when the gods of retail come out of the clouds and onto the field and begin to mix it up in earnest.