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