World wars in Retailville

As Amazon turns 30, Clash is a timely book that explores the fierce rivalry between retail giants Amazon and Walmart, and examines their impact on the retail landscape and customers

Clash: Amazon vs Walmart

Author: Nirmalya Kumar

Publisher: Penguin Business

Pages: 238

Price: Rs 799

The foundation of Clash is an account of how the journey of the world’s largest retail company, Walmart, was disrupted by e-commerce behemoth Amazon. Through the pages of this book, Nirmalya Kumar captures the deep rivalry between the two most successful American retailers and also how they have impacted the entire retail landscape. Making the best of his personal experiences through consulting assignments for retailers and brand manufacturers as well as his research and teaching stints, the author has been able to put together a work that is both informative and entertaining.

The book is neatly planned with each chapter giving the reader a unique perspective about two businesses that are distinctly different and yet so alike. The book starts with “once upon a time, in the bustling town of Retailville”, promising to tell a story, and to a large extent it does. Of course, some of the details about the two companies are well-known and documented over the years. Even so, students of the retail sector and industry trackers are likely to find the work useful.

The writer touches on Walmart’s $18-billion acquisition of Flipkart, in 2018, as he discusses the American chain’s heightened focus on online business. Interestingly, just when Walmart was moving away from its established trend of expanding physical stores, Amazon started spending significantly on creating an offline presence in the US. While the two protagonists were caught in a clear battle, Covid-19 was waiting to happen. The pandemic dealt a body blow to physical retail with some 12,200 stores, many of them storied, closing down.

It is this backdrop that makes Clash a readable case study of the retail universe seen through the battle of the giants. Professor Kumar asks in the opening chapter: ‘’With Walmart and Amazon racing to add online and offline retail respectively, will their distinctive business models morph to become like each other?’’ The following chapters and the pages meander around this question, letting the reader come to a conclusion in a story that’s still unfolding.

The author makes it a point to remind the reader time and again about the scale and size of Walmart and Amazon. “In the US, retailing is estimated to employ 18 million people. Globally, Amazon and Walmart together account for 4 million employees,” is one such instance. Going beyond this book, The Economist quotes a JPMorgan Chase projection that Amazon would sell an estimated $554 billion worth of goods on its websites in the US this year, giving it a 42 per cent share of American e-commerce. It puts the e-commerce market share of Walmart, calling it Amazon’s nearest online rival and the largest retailer of America, at 6 per cent for this year.    

Even as Amazon and e-commerce are typically called disruptors for the retail sector, Professor Kumar refers to Walmart as “the original retail disruptor”. He backs up the theory of the original disruptor through the example of Main Street Treasures, a popular family-owned variety store, which lost footfall as Walmart offered “everyday low prices”. The book analyses what makes Walmart what it is. Going back to the 1990s, it explains how Walmart used information technology to manage business operations in a departure from the prevailing trend of IT being deployed to audit business operations. “Because of the amount of data created and the need to analyse it for insights, the joke in the US in the 1990s was that with a physics PhD, one could work for either NASA or Walmart,” he writes, adding that Walmart had the second largest information system in the US after the Pentagon.  Staying on the theme of size, scale and impact, the book points out that by the 1990s, almost every large brand had a dedicated Walmart team with a physical office in Bentonville (Arkansas), where Walmart was headquartered, to service the account. 

At the core however is this question: What do Amazon and Walmart offer? Professor Kumar attempts to provide an answer. First, for Walmart. “The core value offered by Walmart Supercenters to its customers is financial benefits through bulk shopping, also called basket economics, in which a customer buys a basket worth of goods and that leads to significant savings on the overall cost.” For its rival: “Amazon offers its customers time-saving (not having to travel to the store), less hassle and the ability to buy almost anything (endless aisle).” No rocket science there, but the book painstakingly elaborates each value proposition in detail to conclude that “the two brands are at cross-purposes with each other, thus necessitating that customers make trade-offs when choosing one over the other”.

On whether online retailing is profitable, Professor Kumar says that if Amazon is unable to break even on its online retail business in its best market after so many years of operation, then it’s unlikely that others can do better. Then he goes on to say that profitability in online businesses is not impossible to achieve. “One needs to be nuanced in assessing the profitability of e-commerce.” 

Clash examines India in the penultimate chapter, which brings Reliance Retail into the picture too, making it an Amazon versus Walmart versus Reliance Retail battle.      

Overall, what is missing in this book are direct voices from Walmart, Amazon or any other retail major. The labour and workforce issues, which are often in the headlines in the case of big retailers and e-commerce firms such as these, are also unexamined. That said, Clash is a timely book , especially with Amazon turning 30 recently, and its comparison with the Bentonville-headquartered retail behemoth is only logical.