Omnichannel battle between Amazon and Walmart: Is the focus on delivery the best strategy?

Abstract

A large body of academic research has recently focused on omnichannel retailing especially on brick-and-mortar (offline) retailers adding and integrating online capabilities. Relatedly, trade press has highlighted how offline retailers have been investing heavily in the use of their existing physical retail network for quicker delivery and pick-up of online orders. Looking at the competition between Amazon and Walmart, however, we demonstrate that focusing on quicker delivery is not the best strategy for offline retailers when opening online channels to compete with online retailers. We estimate a multivariate probit model using data from a customer survey and find that offline retailers should instead focus on delivering the fundamentals of retailing to their online customers too – larger assortment, competitive prices, and purchase convenience. Further, we employ cluster analysis to show which demographics are good targets for retailers as they develop omnichannel capabilities, as well as which demographics retailers need to keep loyal to their original channels.

Omnichannel Business

“…In particular, multiple touchpoint shoppers and online-to-offline shoppers provide an attractive option for omnichannel businesses as they already use digital and physical channels and would appreciate a seamless customer journey. Similarly, omnichannel retailers might target younger double-income households with higher levels of education and income, as they seem the most receptive to adopting retailers' newer channels (Jindal et al, 2021).…”

“…The positive effects of channel integration in the transaction phase (i.e., offering in-store pickup after an online purchase) on channel choice can be attributed to providing real-time information about inventory availability and reducing the hassle cost of shopping (Gao & Su, 2017). Interestingly, the factors influencing consumers' choice of omnichannel services (e.g., home delivery of online orders, picking up online orders in store) differ between physical-first (i.e., Walmart) and digital-first retailers (i.e., Amazon) (Jindal et al, 2021). Turning to post-transaction services, Miquel-Romero et al ( 2020) focus on channel choice for post-purchase complaints.…”

“…For example, the physical store is complemented with the mobile channel (Barann et al, 2020;Piotrowicz & Cuthbertson, 2014), which provides consumers with in-depth product information, location-based push messages with personalized offers, self-scanning services, or home delivery for products that are not available in-store (Grewal et al, 2017). Similarly, digital channels are complemented by services in physical stores, when consumers can check online for product availability at a nearby store and pick up, reserve, or return their online purchases there (Jindal et al, 2021). Traditionally offline-oriented retailers such as IKEA, Nordstrom, and Home Depot as well as onlineoriented retailers such as Amazon, Alibaba, and JD.com are prominent examples of companies that can be considered state-of-the-art omnichannel businesses (Euromonitor International, 2018).…”

Getting the most from E-commerce in the context of omnichannel strategies

“…The need to properly manage the trade-off between cost and service is demonstrated by the attempt by many companies to adopt alternative delivery solutions in which a lower transportation cost is coupled with an acceptable service level for the customer (Jindal et al, 2021). Examples are such systems as Click&Collect, Click&Reserve, Click&Drive, and attended and unattended pick-up points and lockers (Cao & Li, 2015).…”

The Analysis of Competitive Business Strategy Among Platform Enterprises Like Taobao, Jingdong and Pinduoduo

“…Benjamin and Wingand thought that platform enterprise offered a cost-effective distribution channel and greatly reduced the logistics costs [2]. Through studying the strategies of Amazon and Walmart, Jindal et al found that providing more kinds of products, competitive prices, and convenient ways to purchase for online users are the best strategies to improve competitiveness [3]. However, Oliva et al found that low pricing and rapid expansion of the market would generate negative feedback to platform enterprises in the long term [4].…”