Traditional retail in the United States, the kind you find at the malls, and urban department stores, is in trouble. The revenues of very large retailers such as Walmart, Macys, Kohls, Sears, and Nordstrom from retail sales at physical locations have all been relatively flat for many years. Target, Macys, Sears, JCPenny, and others have closed hundreds of stores. The much bigger threat to traditional retail is coming from online retail, mostly Amazon, that has gobbled up the lions share of online retail (almost 40% of all online retail), and has been growing at astounding rates. Apparel and electronics are among the largest sales categories for online retailers, so the physical stores and the online giant all compete selling the same goods. Traditional retailers have spent over a billion dollars in the last decade trying to become online retailers, and meet consumers wherever they want to buy, online, or at the store. Its called an omnichannel strategy: using multiple channels like physical stores, the Web, and mobile apps to sell products. Many traditional large retailers such as Walmart, Macys, and Costco, have wound up in the top ten online retail rankings. But so far the omnichannel strategy has not been especially successful in keeping up with Amazons growth. In what promises to be the online battle of the decade, the two biggest players, the heavy weights, Walmart and Amazon, are going head to head for the consumer dollar. In a broader sense, its the online-business model versus the physical- department-store business model which was invented by Macys in 1870. But to be fair to the traditional retailers who have developed their online and mobile sales channel, its more accurate to say its the omnichannel model versus the pure-online digital model of Amazon. Heres how the two heavyweights shape up. Walmart has around 10,500 stores of all kinds throughout the world. Its revenues for its fiscal year ending January 30, 2022 were about $572 billion and its market value was in the area of $400 billion. Walmarts overall sales grew just 2.3% from 2021 to 2022, but its e-commerce sales grew by 11% during the same time period, to about $48 billion (about 10% of its total sales revenue). Over a two-year time period, Walmarts online sales have grown 90%, in part because of its purchase of Jet.com, but also due to its investment of hundreds of millions of dollars in e-commerce operations, and omnichannel e-commerce. Walmart employs about 2.3 million people (nearly 1.6 million in the U.S. alone), making it the largest employer in the world and the United States Amazons revenues in 2021 were $470 billion, up 21% from the previous year. E-commerce sales on its platform, either by Amazon or third-party marketplace sellers generated generated $325 billion of that amount (over 35% of all e-commerce retail revenues in the United States). Amazon also generated over $62 billion in revenue from its Amazon Web Services (AWS) cloud platform. AWS is a highly profitable non-core business for Amazon, and accounts for a majority of its operating income. In 2022, Amazons market value was about $1.6 trillion. The retail battle of the decade shapes up as a contest between a giant traditional retailer that is growing very slowly, and has a small but rapidly growing online presence, versus the largest online retailer which is growing very rapidly, and has a very small physical store presence. Both companies have significant financial assets, and nearly limitless credit, to build or acquire whatever capabilities they choose. Walmart needs to continue to develop its e-commerce systems and capabilities both in-house and through acquisitions. In 2016 Walmart bought the startup Jet.com, a small but fast-growing Amazon competitor. (In 2020, Walmart discontinued Jet after previously integrating its retail, technology, marketing, analytics, and product teams into Walmarts own online business.) In addition to acquiring the Whole Foods grocery store chain, Amazon also opened some physical stores but announced in 2022 that it would be closing many of them. Videos 1 and Video 2 describe Walmarts senior management strategy for developing a competitive online presence. The outcome will in part be determined by how well and how fast Walmart can develop a competitive logistics system to compete with Amazon.

1. What are the three key assets that Walmart can leverage (build on) to compete with Amazon and other online retailers?

2. What is Walmarts e-commerce strategy?

3. Why isnt Walmart worried about the channel conflict between its online sales and its store sales?

4. Why is Walmart in-sourcing the development of its online operation, in part by acquiring technology companies rather than outsourcing development to low-cost countries and other domestic firms?

5. Why did Walmart acquire Jet.com? 6. How does Walmarts fulfillment operation differ from Amazons?