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Last month Walmart started offering small pickup discounts to gain a competitive advantage over Amazon. After all, it could ship things to its stores for a fraction of the cost to ship things to consumers homes. Plus it hoped to encourage consumers to spend more in stores as well while they were there.
Unfortunately for Walmart, Amazon quickly matched the pickup discount and a price war developed. Items would be marked down by more than 50% before the item would sell out and the price war would move onto other items.
At around 9PM last Monday Walmart started offering insane pickup discounts, as much as 90% off if you picked them up in-store. It put Black Friday deals to shame.
That made perfect sense for Walmart as they could ship them to their own stores without it costing a fortune. But if Amazon wanted to match the pricing it would cost them dearly. They would take a huge hit on both the item and the shipping costs.
I think Walmart was testing the waters. They wanted to see just how far Amazon was willing to go. And they wanted to inflict as much pain as possible for Amazon while they were at it. The pickup discounts continued to escalate until about 3PM on Tuesday. Walmart gained lots of new customers with the discounts, but they also learned that Amazon was prepared to invest millions of dollars in the war. Amazon refused to be undersold, no matter what it would cost them.
So where does it go from here?
Walmart’s pickup discounts have dropped back down to smaller levels and Amazon continues to match them. Walmart then matches the Amazon price and adds a pickup discount and Amazon matched the new pickup discount price.
It’s hard to imagine how WalMart can win this war. Amazon seems determined not to let Walmart have any advantage. Amazon has Prime membership, a lower free shipping threshold for non-Prime members ($25 vs $35), and who would rather have to go into Walmart to pickup a crib when Amazon will give you Walmart’s in-store price and still ship it to your home. Plus Amazon has a massive scale advantage over Walmart’s e-commerce division.
I’ll keep watching the battle as I find it fascinating and I’m sure Marc Lore has something else up his sleeve. But even he must be realizing just how hard it will be for them catch up to Amazon’s online dominance.