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AMZN vs WMT Weekly: Counterfeits Bad Fits And Market Share Slips

AMZN vs WMT Weekly: Counterfeits, Bad Fits And Market Share Slips

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Amazon and Walmart took on bad actors, bad fitting clothes and bad optics this week as they jockey to outmaneuver each other ahead of Walmart’s upcoming earnings report.

By this time next week, retail watchers will not only know how Walmart fared in the first quarter but will have a better sense of how the two largest rivals are stacking up against each other in key battleground categories such as food and beverage, personal care and auto parts.

With the Arkansas-based operator of 10,500 global stores set to report its earnings results Tuesday morning (May 18), it wouldn’t be surprising if there was some sort of counter-announcement from Amazon at the same time aimed at deflecting attention away from its rival’s moment in the spotlight.

While financial results from January, February and March seem a bit dusty given all that has happened since then and the fact that we’re now halfway through the second quarter, it will nonetheless be a must-see event.

Between that backdrop and the prior edition of the AMZN vs WMT Weekly, the two massive merchants have spent the past seven days fine-tuning their operations and staff in an effort to build more in-roads into customers’ wallets by bolstering reasons to visit their stores.

A Safe Place To Shop

One of the quickest ways to lose customers is to operate an unsafe place for them to do their shopping, be that in-store or online. To that point, Amazon’s latest Brand Protection Report revealed the mind-boggling number of bad operators lurking on the web that its 10,000 person cyber police force was able to derail over the past year.

“Our team’s relentless innovation has helped us stop 6 million attempts to create a selling account and more than 10 billion suspect listings as we continue to drive counterfeits to zero,” said Amazon’s Vice President of Customer Trust and Partner Support Dharmesh Mehta.

With the additional help of a $700 million security investment, Amazon said it was pleased with the progress it is making toward its goal to bring counterfeit sales to zero, saying the effort was critical for both consumers and businesses.

“We’ve helped our selling partners keep their virtual doors open, and despite increased attempts by bad actors, continued to ensure that the vast majority of customers shop with confidence from our broad selection of authentic products,” Mehta said, noting that the eCommerce giant had destroyed 2 million counterfeit items it had seized along the way.

Help Wanted

While a $700 million and 10,000-person security commitment is huge, at Amazon that amounts to about two-tenths of 1 percent of its annual sales and less than 1 percent of its total 1.3 million person workforce — a headcount that it is actively looking to grow.

In separate announcements, Amazon said it was looking to hire 75,000 new employees for fulfillment and transportation positions, and that it was also throwing in $1,000 signing bonuses on top of an hourly wage averaging $17 per hour. And for those who have already been vaccinated for COVID, Amazon will give new employees an extra $100 for that too.

Amazon Vice President of Global Customer Fulfillment Alicia Boler Davis said in a Thursday (May 13) press release that new hires will get “great pay and robust benefits” from their first day on the job.

“Working at Amazon also comes with an unwavering commitment to safety, especially as we continue to navigate a global pandemic,” she added.

The very next day Amazon’s HR effort was out with another hiring announcement, this time that it is looking to bring on nearly 2,000 white collar workers to fill up three new 22-story office towers at its so-called HQ2 campus in Arlington, Virginia.

According to an announcement, the HQ2 hires will more than double its current 1,600-person headcount at HQ2 and once completed would amount to about 15 percent of the 25,000 jobs it expects to add to the greater Washington D.C. area, including both technical and non-technical workers.

Bye-Bye Bad Fit

In a deal it called a “game changer,” Walmart announced Thursday that it had acquired a Israeli startup Zeekit for an undisclosed sum. The purchase not only marked its second tech-related acquisition investment in seven days (Walmart bought telehealth firm MeMD last week ), but was a major step toward using artificial intelligence (AI) to address two of the eCommerce world’s biggest problems: selling clothes that don’t fit and the subsequent high rates of returns that follow.

In a blog post announcing the deal, Walmart said the acquisition was part of its ongoing effort to expand its assortment and meet the needs of its growing base of online customers who want variety, ease and fun when shopping for apparel.

“Virtual try-on is a game-changer, and solves what has historically been one of the most difficult things to replicate online: understanding fit and how an item will actually look on you,” said Denise Incandela, EVP of apparel and private brands at Walmart U.S. “Zeekit will help us deliver an inclusive, immersive and personalized experience for our diverse customer base.”

Walmart said Zeekit’s technology was scalable for other fashion experiences, including the ability to build virtual closets and seamlessly mix and match clothing.

“We’re confident that with [Zeekit’s] expertise in bringing real-time image technologies, computer vision and artificial intelligence to the world of fashion, we’ll identify even more ways to innovate for our customers in our continued effort to be the first-choice destination for fashion,” Incandela said.

Walmart’s Big Problem

As Walmart moved to grow its apparel and social commerce offering, it also found itself scrambling to maintain the dominance of its biggest business category: food and beverage.

This after a leaked 100-page memo obtained by Recode, which Walmart distributed to advertisers in February, read, “Grocery, the growth engine of the business, is losing share rapidly. More than ever, Walmart shopper[s] are choosing the competition.”

This phrase was printed next to the logos of rivals such as Publix, Target and Albertsons, and  was paired with data showing that consumers have been choosing competing grocers more often and choosing Walmart less often.

Another page of the document reads, “Walmart is not first and preferred. Must elevate quality assortment + value!”

Even so, according to data in PYMNTS Whole Paycheck Tracker Report Walmart maintains a 10x margin advantage in grocery market share over Amazon, with the category accounting for 55 percent of Walmart’s gross sales, totaling $245 billion in revenue.

Specifically, PYMNTS data show since 2018 Amazon’s F&B business has added just $2.8 billion in incremental revenue, or about 13 percent, as it went from $21.5 billion to $24.3 billion in 2020, which also happens to be the best year for grocery sales in the history of mankind. By comparison, Walmart’s F&B sales grew by $20 billion or 8 percent last year alone.

It is for this exact reason that Amazon has recently been reported to be itching for a “food fight” of sorts, and is in the process of building out the Amazon Fresh physical store base from a 10-store pilot program to a major brick-and-mortar player.

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May 14, 2021 at 04:00PM
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