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AMZN vs WMT Weekly: Retail Slump Raises Stakes Of Upcoming Sales Events

AMZN vs WMT Weekly: Retail Slump Raises Stakes Of Upcoming Sales Events

June 18, 2021 at 04:00PM
by PYMNTS

When it comes to retail sales data, slowing growth or even flat is one thing, but declining — that’s a whole new ballgame.

But that is exactly the backdrop that Amazon and Walmart find themselves in this week in the wake of Tuesday’s weaker than expected report from the Commerce Department that showed retail sales slid 1.3 percent last month. While the weakening demand was particularly pronounced in the outsized decline in sales of so-called big ticket items such as building supplies and automobiles, other broad based categories like Electronics and Appliances and General Merchandise also went down from the prior month.

While shocking, this “statistical question mark” of a report not only cast doubt on the virility of the consumer-led economic rebound but reflected a change in buying behavior with a skew toward eating out in restaurants (or hosting parties at home), buying new outfits to be with friends or self-pampering via personal care items.

The report also had the unintended effect of dialing-up the importance of an upcoming spate of sales events, that have grown in number — and duration — over the past few weeks since Amazon put its two-day Prime Day event on the calendar, to include Walmart, Target, Best Buy, Kohl’s, Ace Hardware and more, all holding multi-day promotional sales of their own.

In the long term, competition in business is always a good thing that ultimately makes companies stronger and more responsive to consumer needs. In the short term, however, it can be stressful at best, and outright painful at worst, as retailers face unprecedented pricing challenges from rivals that are all being made in the light of day where everyone can see them and compare.

To be sure, that is a win for consumers and a gauntlet for Amazon and Walmart and others who need to emerge victorious on the other side of the newly elevated and intensified summer sales event season.

Fake Review War Escalates

This past week also saw Amazon stepping up its war on the confidence-crushing and business-busting scourge that is fake customer reviews, not by building up its own army of fraud warriors but by calling on unnamed social media platforms and global consumer protection regulators to do more.

Amazon’s blog-based call for external backup was positioned as needed to crush the final 1 percent of a problem that it said it has nearly extinguished itself, with the Seattle-based giant that controls over 50 percent of all online retail sales noting marked year-on-year improvement but conceded there’s still more work to be done.

“While we appreciate that some social media companies have become much faster at responding [to fake review schemes],” Amazon said, “to address this problem at scale, it is imperative for social media companies to invest adequately in proactive controls to detect and enforce fake reviews ahead of our reporting the issue to them.”

As it stands, Amazon said it had stopped more than 200 million fake reviews before they were ever seen by customers, and that 99 percent of review enforcement was driven by its own proactive detection. The $1.7 trillion retailer said it would continue to invest and innovate to allow only genuine product reviews in its store in order to protect its 300 million active customers, as well as a level playing field for its 1.9 million sellers.

The 10-Mile Drone Play

Walmart, in all its ubiquity, has never shied from the fact that 90 percent of U.S. consumers live within 10 miles of one of its 4,700 stores. But that unmatched splay of physical locations is continuing to take on new and different use cases in the omnichannel era as consumers shop online and then look for the fastest way to get their goods, be that via curbside or in-store pickup or increasingly swift delivery options that have shrunk from weeks, to days, to hours over recent years.

Now, Walmart’s collection of centrally located properties are increasingly being viewed as potential airports for drones, which could be loaded, take off and land from those heretofore barren rooftops — that are a mere 10 miles away from pretty much everybody.

With that in mind, Walmart’s increased but undisclosed investment in aerial delivery firm DroneUp this week takes the instant, autonomous delivery paradigm to new heights.

“After safely completing hundreds of drone deliveries from Walmart stores, we’re making an investment in DroneUp to continue our work toward developing a scalable last-mile delivery solution,” Walmart U.S. CEO John Furner said in his blog announcement.

“[Walmart has] 4,700 stores stocked with more than 100,000 of the most-purchased items, located within 10 miles of 90 percent of the U.S. population [yes … he went there]. This makes us uniquely positioned to execute drone deliveries, which is why our investment in DroneUp won’t just apply to the skies but also the ground,” Furner said, before pledging further aerial updates and rollouts in the coming months.