WINNER SELLS ALL

Timely report on the ongoing clash between Walmart and Amazon for domination of the online marketplace.

When Amazon branched out from its initial bookselling business to become an online store for everything, it was bound to come up against the then-mightier Walmart empire. The trouble was, writes business journalist Del Rey, Walmart’s executives were “consumed by the massive revenue and profits associated with its Supercenters, and mostly ignorant to the threat and promise of the internet.” That uncomfortable position was antithetical to the operating premise of founder Sam Walton, who favored a decentralized system where local stores sold goods appropriate to the marketplace. On the other hand, Jeff Bezos’ growing empire had no practical constraints; it could sell everything, and its development of the Prime option of paying an annual fee for quick shipping outflanked anything Walmart could offer. Doug McMillon, a new Walmart CEO, turned some aspects of the business around to the extent that it was Amazon’s turn to play catch-up, including a grocery delivery service that Amazon abandoned only to start over by acquiring Whole Foods. In the end, both conglomerates fought each other in pricing wars that in the long term would have been unsustainable. Today, Del Rey writes, drastic cost-cutting is less common. While in one instance Amazon’s price for a 12-pack of diet soda was $10 more than Walmart’s, getting the latter would involve driving to the store, while the former would arrive at one’s door. Convenience versus price remains an issue, but regardless, the author concludes, surrendering the marketplace to a pair of mega-corporations doesn’t make for a healthy economy: “Outside forces—whether they be regulators, new startups, or labor groups—will still be necessary to apply pressure where the rivalry alone is not producing the best outcomes.”

An eye-opening look at a battle of corporate titans that shows few signs of slowing down.