Amazon.com vs. Wal-Mart

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Amazon.com vs. Wal-Mart
Lets Get Ready to Rumble!!!!

• E-Commerce Presentation Team

• John Lin
• Darin Bodin
• Carmen Saleh

• Eric Head
• Robert Distefano
• Dom Gaudin

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The Amazon Team

• CEO Jeffrey Bezos

Expertise Bits Bytes
Company Statistics
Market Cap 16 Billion Stock Price 100
1/16 Net Profits -138 Million (2Q
99) Headquarters Seattle, Washington
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The Wal-Mart Team

• CEO David Glass

• Expertise
• Bricks Mortar

Company Statistics

• Market Cap 188 Billion
• Stock Price 42 1/4
• Net Profit 4.43 Billion
• Headquarters Bentonville, AR

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HISTORIES
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• 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

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• 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

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• 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

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• History of Amazon.com (continued)

Mission To be the worlds most consumer-centric
company where people can find and discover
anything that they want to buy online.
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History of Wal-Mart
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!
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History of Wal-Mart (continued)
1988 David Glass named CEO
1991 Established International Presence in
Mexico
1995 Established Presence in South America
1996 Entered Asia
1997 Largest national employer with 680,000
associates and first 100 Billion
sales year!
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• 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!!!

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STRENGTHS
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• Amazons 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

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• Amazons 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
• Amazons IT and Logistics executives were
  formerly employed at Wal-Mart

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• Wal-Marts Strengths
• A leader in almost every retail category
• 137.6 billion in sales last year
• 4.43 billion in net earnings
• Excellent vendor alliances

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• Wal-Marts 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

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WEAKNESSES
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• Amazons 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

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• Wal-Marts 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?!

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OPPORTUNITIES
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• Amazons Opportunities

• Expand internationally
• Actively pursue online auctions
• Evolution of mass market from merchant-centric to
  consumer-centric

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• Amazons 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

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• Wal-Marts Opportunities
• Exploit vendor relationships
• Establish strategic alliances
• Explore hybrid models to enhance customer service
• Spin off wal-mart.com as a separate IPO

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• Wal-Marts 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

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THREATS
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• Amazons 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

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• Wal-Marts 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!!

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CONCLUSION
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• Prediction NO ONE WINNER!
• The Hybrid Model
• Segment Fluidity - Attention Scarcity
• Bits Bytes vs. Bricks Mortar Analysis

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Questions??