Competitive Forces And Value Chain Model Of Walmart And Amazon

Decent Essays
Analyze Walmart and Amazon.com using the competitive forces and value chain models.
Walmart an Amazon are the biggest retailers in their segment; Walmart as physical retailer and Amazon as an online retailer. Now they are starting to compete more and more against each other due to a change of their customer base. Walmarts customers becoming more and more technically knowledgeable and feel more and more comfortable by using a phone to order a product online. These two companies are so big that it is hard for other companies entering the market. Walmart is having the price strategy with everyday low prices. To make a profit Walmart has to sell large quantities of a product. On the other hand Amazon does not have to calculate the cost of employees
…show more content…
Also these two companies are competing against each other. This displays that there are substitutes for both companies. Usually there is for every successful product a substitute product. Currently Walmart is fighting against Amazon because this could be the future and Amazon might be able to replace Walmart totally.

Seven years ago only ¼ of Walmart customer base shopped at Amazon compared to now a day this number increased to 50%. That displays that the customers from Walmart getting more familiar with shopping online, but still go to physical stores. For both companies it is important to maintain and increase their customer base and Amazon was in the last years highly more successful than Walmart. Never the less 2/3 of the US population are living within a 5-mile radius from a Walmart store.

The suppliers are playing a big role in both companies offers and profits. These two companies are so dominant in their area that both can pick their suppliers however they want. They are also able to dictate the prices the want to buy and sell a product for. If a supplier does not agree they will miss out on the chance to get seen and purchased by a large quantity of
…show more content…
The difference is that Walmart started as physical retailer and Amazon started as an online retailer. Walmart is having the price strategy that guarantees every day low prices. With almost no employee cost compared to Walmart, Amazon is able to offer its products for a very low price too. For most orders over 30 dollars Amazon is offering free shipping. Also Amazon offers a prescription for 99 dollars that includes free two day shipping. Walmart reacted to the trend that more and more customers becoming familiar with online shopping and acquired tech companies to be able to compete with Amazon in the online retail

Related Documents

  • Decent Essays

    Throughout article, “Amazon.com Is a 21st Century Deal with the Devil,” by Amy Koss states that Amazon.com is just something that the devil made to win the souls of people. I believe her because many stores are going out of business because of Amazon. This means that people who worked there at the time have to find a new job because they can’t make money anymore. The reason for this is because instead of people going to the store to get what they need, they just hop on Amazon and try to find what they are looking for.…

    • 328 Words
    • 2 Pages
    Decent Essays
  • Decent Essays

    Wal-Mart had to a great number of considerations to make things happen, and be successful. A few of them are, they need to know the prices of products at competitive stores, and how much money they have to make to in order to fulfill this promise.…

    • 266 Words
    • 2 Pages
    Decent Essays
  • Improved Essays

    Jeff Bezos is a 52 year old business man holding the 5th richest with an amazing net worth of 45.2 billion dollars. Jeff Bezos was born on January 12, 1964, in Albuquerque, New Mexico, to a teenage mother, Jacklyn Gise Jorgensen, and his biological father, Ted Jorgensen. Jeff attended River Oaks Elementary School in Houston from fourth to sixth grade. While in high school, he attended the Student Science Training Program at the University of Florida, receiving a Silver Knight Award in 1982. He was high school valedictorian and was a National Merit Scholar.…

    • 901 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    Why Is Walmart Successful

    • 1025 Words
    • 5 Pages

    Although Wal-Mart had brought great advances in communities, it also developed tribulations. The new company began to pose a threat to smaller stores and downtown retail. It was eliminating chances for small-town merchants to make a profit because of everything it had to offer. Wal-Mart offered almost everything a family would need all in one place, making everything more accessible. So although Wal-Mart chased away the competition, it made goods easier to access for families.…

    • 1025 Words
    • 5 Pages
    Improved Essays
  • Improved Essays

    Walmart Vs Rubbermaid

    • 936 Words
    • 4 Pages

    Everyone loves the low prices offered at Walmart, it means more money saved for all of us. Unfortunately there’s a cost to be paid for these cheap goods and it might be worse than having to pay a few extra dollars. Our economy is taking the punches so all the rich and mighty of Walmart can hord our hard earned cash. Wit poor wages/benefits, tax avoidance, and huge China sourcing, Walmart is only making its employees and everyone around it poorer along with all the small businesses around it.…

    • 936 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    Walmart External Factors

    • 861 Words
    • 4 Pages

    Based on their website, the entire motivation of Wal-Mart is to get people to save money so their lives can be better. In this matter, Wal-Mart offers products with high qualities but at lower prices than other retailers. In this way, Wal-Mart has a comparative advantage over its competitors in terms of price. In which it helps Wal-Mart win clients over from different retailers. Wal-Mart achieve its low-cost structure…

    • 861 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    Publix Strategic Factors

    • 1043 Words
    • 5 Pages

    Because of this they have brought their own threats into the industry. Now many other supermarkets and food providers have decided to approach the competition in a similar manner as that of Publix. Over the years, Walmart has started to add more healthy food options to their product list and expand their organic food selection. Walmart also started lowering prices on many of their higher quality products. Although there are a few areas that Walmart seems to be surpassing Publix in, but they have yet to top them in the customer service area.…

    • 1043 Words
    • 5 Pages
    Improved Essays
  • Improved Essays

    Allie Traw Ms. Henry ENG 104 16 March 2016 Target vs. Walmart Target and Wal-Mart are known as two of the most popular retailer discount corporations in the world. These two chain stores have a lot in common and they are very important in society today. Both of these chain stores are super-markets with a wide variety of items being sold daily. They both offer the same type of items and try to arrange affordable prices for all communities. People have different perspectives on both of these stores.…

    • 651 Words
    • 3 Pages
    Improved Essays
  • Improved Essays

    Wal-Mart keeps their prices low, because the items they sell are produced by an even lower price. For example, if you’re going to Wal-Mart to buy something such as shelves of a desk. The item will probably not be as strong as something coming directly from a handmade store or a strictly furniture store. The price will be extremely less, but so will the…

    • 1118 Words
    • 5 Pages
    Improved Essays
  • Improved Essays

    As a result, in 1993, 55% of Wal*Mart stores faced direct competition from Kmart stores and 23% from Target stores. This was opposed to 82% of Kmart stores and 85% of Target stores that faced competition from the Company. Third, Wal*Mart was very competitive in terms of prices and as a result, gave its stores managers more latitude in setting prices than its competitors. As a result, using inventory and sales data, the Company’s store managers allocated shelf space for a product category according to the demand at his or her store.…

    • 939 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    Walmart’s competitor, Amazon, experienced a different flex in sales that year. The online retailer reported a 19.5% in net sales for 2014. (Teach, 2015). Instead of downsizing their brick-and-mortar…

    • 1026 Words
    • 4 Pages
    Improved Essays
  • Great Essays

    Customers can use the app or the website to purchase goods. Walmart is also using technology to make things more efficient for their customers. For example, they implemented Yumprint so that customers can search for recipes they like and find the correct ingredients used in the recipes at stores. The reason Walmart will be successful against Amazon.com is because they can utilize both technology and their physical locations whereas Amazon.com lacks the physical location experience for their…

    • 927 Words
    • 4 Pages
    Great Essays
  • Great Essays

    Key Problems/Issue of the Case Jeffrey Bezos started Amazon in 1994, in Seattle, Washington, and launched Amazon.com in July 1995. Bezos chose Seattle as Amazon’s headquarters because of the lack of sales tax, technology cluster, and its proximity to the largest book wholesaler, Ingram. Amazon started out by selling books but later developed into an online retail department store, offering a large range of products. The company also served as a third-party marketplace where other individuals and businesses could sell their items. Amazon quickly expanded as the concept caught on, and people could compare prices and buy a variety of product offerings from a single website.…

    • 1308 Words
    • 6 Pages
    Great Essays
  • Improved Essays

    Q1. What was Wal-Mart’s early global expansion strategy? Why did it choose to first enter Mexico and Canada rather expand into Europe and Asia? Walmart’s early global expansion strategy earlier is to have low priced products to attract wide range of customers.…

    • 810 Words
    • 4 Pages
    Improved Essays
  • Great Essays

    Bargaining power of suppliers. Since there are no switching costs for customers, they can easily switch suppliers. However, big companies like Amazon, eBay and Provide Commerce have developed a business branding and strategy that allows them to offer quality service, competitive prices, and fast shipping. These competitive advantages give these companies a certain power to retain its customers, making hard for the competition to match that kind of service. 5.…

    • 1745 Words
    • 7 Pages
    Great Essays