Ewan Kay
Monday 19, June 2023
Channel and Retail Marketing
Case Assignment 1: Will the
Favourite Retailers of Today
Remain Popular?
Table of contents
1. What must retailers do to stay on top?
2. Strengths and weaknesses
3. Favourite retailer
1. What must retailers do to stay on top
Adapt to shifts in the way consumer shop. Amazon, Walmart and Best Buy are doing
something right, but they have to keep in mind that having things work well one way doesn’t
mean it is the only way. Amazon's success is rooted in its ability to identify and adapt to
changing consumer preferences. Amazon should continue expanding its product offerings,
identifying emerging trends, and leveraging customer data to deliver personalized
experiences and relevant product recommendations.
Best Buy should continue differentiating itself with its customer experience and
knowledgeable staff. It should continue investing in employee training, ensuring staff
expertise, and offering personalized assistance to customers, particularly in product
categories where expertise is crucial.
2. Strengths and weaknesses
Amazon
Data
While everything imaginable is on the internet, people have grown accustomed to finding what
they want quickly. Amazon has capitalized on that fact. Consumers who log in to their Amazon
account often first see something of interest first thing on the homepage.
Amazon collects as much data as legally permitted about its consumers, analyzes it, and helps
them find their way through Amazon’s vast inventory. For example, when an Amazon user
starts filling in the search bar, the website will auto-suggest what that person is most likely
searching for based on past purchases and browsing history.
Data-driven customer engagement.
Another practical use of data and AI analysis is to engage customers. Amazon has already
achieved high penetration; they’ve had to look elsewhere for new growth, like purchase
frequency and basket size.
Unlike most websites, Amazon isn’t trying to appeal to first-time visitors; they make money
through loyal customers. To that effect, Amazon gave us “Today's deal.” This gave many
Amazon users an extra reason to check in daily, whether they need something or not, of fear of
missing out on great savings.
# of products.
Amazon lists more than 3 Billion products1. Amazon itself may only have 12 million, but by
adding 3rd party marketplace sellers, that number balloons. (Comparatively, Walmart sells 160
million2). Many people in rural areas can find certain niche products only on Amazon. My father
is into a niche hobby, and despite living in Toronto, some repair items he needs, he can only
find on Amazon.
Delivery
Amazon has mastered the delivery process. Warehouses everywhere, people looking for
flexible jobs willing to drive delivery trucks and mighty logistical power have enabled Amazon
to deliver most of its products anywhere in two days, usually for free. 275,000 drivers are
delivering 10 million packages every day3.
Weakness
Lack of in-store experience
Some customers want to get their hands on certain products before purchase, which isn’t
possible in any way via Amazon. The lack of brick-and-mortar stores also prevents customers
from receiving personalized assistance or immediate gratification. Sometimes I want
something now, but no can’t do through Amazon.
Lack of expertise
Specialty retail stores often cultivate expertise and knowledge in specific product categories.
They often employ knowledgeable staff who spend time working with similar products and can
provide recommendations, advice and a personalized shopping experience.
Another of Amazon’s weaknesses is the predatory practices that got the company to where it
is and the perception it left of the company in people’s minds. People who don’t use Amazon
usually dislike the company and its values.
Best buy
Strengths
Product Expertise
Opposite to Amazon, Best Buy’s biggest strength is the experience customers enjoy in their
brick and mortars. Best Buy trains its workforce to be knowledgeable about the products it
sells. Customers can walk in looking for a product, headphones; for example, a best buy
employee will often ask what use the customer is seeking, and they can offer customized
recommendations.
In-store experience
Best Buy displays products and often allows customers to interact with them before
purchasing. This helps many customers have
Geek Squad service
Best Buy’s central differential is its Geek Squad offering; Geek Squad offers services
such as technical support, installation, repairs, and consultations for consumer
electronics and appliances. These product expert technicians add value by enhancing
customer confidence and loyalty. Geek Squad services also provide ongoing support,
building a long-term relationship with customers beyond the initial purchase.
Weaknesses
Intense competition
Best Buy operates in a highly competitive retail landscape, facing competition from both
brick-and-mortar stores and online retailers. Intense competition can pressure pricing,
margins, and market share, requiring Best Buy to innovate and differentiate itself
continually.
Limited inventory
Best Buy is also limited by what it can make available in each store. A consumer looking
for headphones will have multiple options, but the specific store might not have the
desired product. Especially if they aren’t looking for a popular product, Best Buy might
fall short.
Walmart
Strength
Pricing
Walmart's key strength is its ability to provide competitive pricing. The company uses its
vast size, global supply chain and bargaining power to negotiate favourable prices with
suppliers. The Everyday Low Pricing strategy attracts more price-conscious consumers.
Breadth of products
Walmart is a one-stop shop. While not specializing in specific areas, consumers can
find everything at Walmart. I think of a story by Shaquille O’Neal that represents an
excellent example of this. After being traded and moving cities, he arrived at an empty
house, took a trip to Walmart and furnished his home in one stop. The store attracts
consumers who regularly shop for groceries and serves most of the other needs they
may have come up with, from toilet paper to clothing to televisions.
Weaknesses
Low-Profit Margins
Walmart's focus on offering low prices pressures profit margins. The company operates
on thin margins, relying on high sales volumes to compensate. This leaves Walmart
vulnerable to cost fluctuations, such as rising wages, raw material prices, or
transportation expenses. Any significant cost increase without a corresponding increase
in sales could impact profitability.
Limited Appeal to Higher-Income Shoppers
Walmart's focus on affordable products may limit its appeal to higher-income shoppers
seeking premium or luxury offerings. While Walmart offers a wide range of products,
including higher-end brands, its association with low prices and a mass-market appeal
may not resonate strongly with affluent consumers who prioritize exclusivity and higher
quality.
Favourite retailer
I don’t think of myself as particularly loyal to any retailer. No specific retailer comes to
mind, but during Covid, I did shop on Amazon a fair bit. I lived in a rural area but was
still serviced by Amazon Prime. Despite what I think of Amazon, I still couldn’t help but
fill my needs there.
Shopping in stores wasn’t an option; they were far and closed. With little to do and
money to spend, there was excitement in watching the Amazon truck pull around the
corner; what’s coming today? Like a hit of dopamine whenever today was the day that a
new book or game was coming.
It only took a few orders to get used to the Amazon reliability. Buying something online
takes more trust than in stores. You don’t physically see the product or the person
selling it. Whenever I want to buy something, I need to find a new retailer that sells it,
hoping the transaction goes well. Amazon sells everything I've ever wanted.
They saved my card, so I know I won’t need to worry about them accepting my payment
method. They have my addresses saved, so I don’t have to keep giving out my delivery
address all over the internet. The Prime logo tells me it will arrive in two days, and I
won't pay extra for shipping.
References
1. ScrapeHero. (2020, December 23). How many products does Amazon Sell Worldwide January 2018? ScrapeHero. https://www.scrapehero.com/how-many-products-amazonsell-worldwide-january-2018/
2. Walmart Online Application Information (with assessment test tips). Zippia. (2023, May
11). https://www.zippia.com/advice/walmart3. Szecsei, S., Szabolcs SzecseiWith over a decade of experience in writing and two
decades in making music, Avramovic, M., Pixter, R., Florence, Pao, A. J., Munni, &
Soliongco, K. (2023, May 20). 39 Walmart statistics to showcase the retailer Giant’s
Power. CapitalCounselor. https://capitalcounselor.com/walmart-statistics/
4. Staff, A. (2022, August 19). How Amazon’s DSP program has created $26 billion in
revenue for owners. US About Amazon.
https://www.aboutamazon.com/news/transportation/how-amazons-dsp-program-hascreated-26-billion-in-revenue-for-owners