Amazon / Walmart smackdown! …and how to get a hard cover for $9

October 16, 2009

ChannelAdvisor ChannelAdvisor By ChannelAdvisor


Starting yesterday (10/15/09) there was some interesting back and forth between Wal-mart and Amazon that I wanted to give Amazon Strategies readers a blow by blow of:

  • First blow: (10/14 – in the am)  –  Wal-mart announces they will offer 10 pre-release hard covers for $10. CEO Raul Vazquez is quoted as saying: “If there’s going to be a ‘Wal-Mart of the Web’, it is going to be Our goal is to be the biggest and most visited retail Web site.” in this WSJ piece.
  • Second blow: (10/14 pm) – Amazon counters Wal-mart with $10 on each books and of course free shipping for Prime/$25 super saver.
  • Third blow: (10/15 in the am) – Wal-mart lowers prices again to $9
  • Fourth blow: (10/15 hours later) – Amazon matches the $9 price target.

So far that’s where we are, I’ll keep you updated if anything else happens in this particular battle of the larger war between these behemoths.

How much ground does need to make up?

Wal-mart doesn’t release figures that tell how big, and of course Amazon reveals their revenues as they are  public company and online-only.  So to get an apples to apples comparison we have to look at a couple of sources.

First, there’s the Internet Retailer’s top 500 list (08 results).  They have Amazon as the top retailer with $20b in sales and as number 13 with $1.7b in sales.  Thus this datapoint suggests that Amazon has a 10X lead on

Second, there are traffic sources like comscore and that can give us a view of the relative traffic going to each site.  If you assume similar metrics like ASP, conversion rate (which Amazon admittedly is probably a good bit higher on, but hold those constant for now).  Below is a traffic analysis for both: (click to expand)

Here you can see based on unique visitors alone, Amazon has a 2X lead over If we add in Amazon’s selection advantage and other areas they are currently ahead of the pack on, that 2X traffic lead could be a 4X sales lead.  10X is a little hard to believe.

While that feels like an insurmountable lead, this is Wal-mart we’re talking about.  They are a $400b+ retailer with buying power that’s easily 20X that of anyone else.  As a software guy, I’m always reminded of case studies in history when everyone would laugh at Microsoft whenever they were behind (spreadsheets, OS, browser, video game consoles) and then decide to throw their weight into something.  Usually they were able to close the gap very quickly and quiet the pundits.  In the world of retail, scale matters and nobody has the scale of Wal-mart, so don’t count them out of the race just yet.

While we’re talking books here, I take this as a signal that Wal-mart has decided it’s time to cut deeply into that 4x lead and they are clearly putting their money where there mouth is.

$8 anyone? Anyone? going, going…watching the war in action  – what do you think?

I’m looking forward to the new Stephen King book so thought that would be a good one to watch, you can see the prices for each here – do you think that Amazon/ will go lower?

Sound off on your thoughts on this interesting first fisticuffs between the two retail giants in comments.

SeekingAlpha Disclosure – I am long Google and Amazon.  eBay is a shareholder in ChannelAdvisor where I am CEO.