Evolution of the retail segment – Walmart v/s Amazon

evolution of retail

With the passing time, the business model in the retail segment is getting more complex. Online business is already popular among masses. However, even now a majority of the population still purchases from the physical stores. Evolution has dominantly happened on the back of technological innovation. The present case of how Walmart and Amazon are transforming is on the same line as well.

Once upon a time, it used to be a very simple model. If you want to sell your product, you need to have a physical outlet. So, if you want to sell shoes you will set up a physical store to sell shoes, a grocery store to sell groceries, apparel store to sell clothes and fashion wear, etc. With time, the hyper markets came into existence. This concept was welcomed by the masses due to it’s convenience – A single place where you can find a variety of items – electronics, apparel, household items, groceries, etc. Walmart has been pioneers in this segment. They have come up with the right strategy and technology which moved them to the position of market leader.

With the Internet boom, the strategy changed. Now, if you have to sell your product you will create your website and sell your products through it. This was convenient. Sellers don’t need to invest in physical store setup. However, some customers (primarily ones who wanted to touch and feel the product before buying) were reluctant initially to use the web way. With time, people became more familiar with online purchasing. Easy return policy made it convenient for the buyers to return the purchased items in case they weren’t happy with the item. This was an opportunity for Amazon and they created an online marketplace where sellers can sell their items to the buyers. Through the usage of advanced technology and optimized business strategy, Amazon ensured the adoption of the marketplace for both the buyers and sellers.

Twenty years after the online marketplace, Amazon is now moving towards enhancing customer satisfaction through physical hyper markets. Amazon Go is Amazon’s answer to creating a queue-less and smooth buying experience at a physical store. In this way, Amazon is not leaving any store unturned to give a good competition to it’s retail rivals Walmart. Walmart has a different response. It’s trying to expand it’s brand by acquiring various online retail brands (like Bonobos). This will not only ensure Walmart’s increase in online presence but sooner these retail brands (which were only present in online retail sites till now) might be available at a Walmart hyper market.

I was reading “Zero To One” where Peter Thiel tells that technology is one of the primary factors to drive innovation. Look at the retail segment and we will find technology playing a big role to drive innovation and market expansion. Some e-commerce players like Flipkart is planning to use AI for smart chatbots on it’s sites. One thing is for sure – Interesting days are ahead of us in the retail segment – both in online and physical form.

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