The Amazon vs. Walmart battle is one of the great American business case studies happening in real time. DisrupTV caught up with Jason Del Rey, author of Winner Sells All, about his reporting on Amazon and Walmart for his book.
Here's a look at the takeaways from the DistrupTV interview, which starts at the 20 minute mark:
- "(Walmart) is one of the greatest case studies in the innovator's dilemma that we’ve ever seen in modern business history," said Del Rey. Amazon and Walmart are the two biggest private sector employers in the US and affect our lives in so many ways. "But the rivalry has impacted each other's decisions," said Del Rey.
- Walmart CEO Doug McMillon isn't a risk taker but recognizes the company had to take risks to survive. Del Rey said McMillon in an interview said Walmart is on the right path toward transformation, but it took years to get there. Walmart initially thought that Amazon and e-commerce wouldn't be a big threat.
- How did Walmart miss Amazon? Part of the Walmart blind spot toward Amazon was arrogance but a lot of it was incentives and how brick and mortar managers didn't want to cannibalize physical sales. "The one thing I learned is that incentives really matter at a business and how different units interact for better or worse," said Del Rey.
- Top down culture changes. Del Rey noted that McMillon has changed Walmart culture from the top and Jeff Bezos clearly drove Amazon. What's changing now is that Bezos has handed off the CEO role to Andy Jassy. Del Rey added that the Jassy tenure has been marked by cost cutting and diving into the retail business. "Where there is more of a difference is with the cost cutting. I don't know if Amazon under Jeff Bezos would have had it in them to pull back as harshly," said Del Rey.
- What do Walmart and Amazon have in common? Del Rey said Amazon's leadership principles about customer focus and a bias for action came from Walmart. Each company has strayed at different points. "In early 2000s, Walmart got fat on its profits and success," said Del Rey. Today's Amazon added hundreds of thousands of employees and lost its bias toward action and is now focusing operations.
- Healthcare potential. Both Walmart and Amazon are targeting healthcare because there's a customer need and the profit margins are better, said Del Rey. "Both of them have been involved in this space in some way," said Del Rey, who noted that both companies have also dueled over healthcare acquisitions. "Both have had failures over the years, but both are really giving healthcare a go."
- Will it always be Amazon and Walmart as a duopoly. Del Rey said the competition between the two retail giants is good for competition, but "my fear is competition alone will not be enough." He added that it would be great to see a new company delivering convenience and a serious No. 3 rival to Walmart and Amazon. Del Rey added that Target gets overlooked, but it's more likely that a currently underestimated rival or adjacent player like Shopify will be a threat.
- What's the follow up? Del Rey had to stop writing as the generative AI craze took off. Another storyline for the future will be how Amazon and Walmart expand into India.