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> Think Walmart vs Amazon. Online shopping is actually a completely different product. This is actually a great example, but not the way you intended it. Amaz

by smt88 3y ago

> Think Walmart vs Amazon. Online shopping is actually a completely different product. This is actually a great example, but not the way you intended it. Amazon isn't beating Walmart. They haven't even dented Walmart's revenue[1]. They're just killing everyone other than Walmart. Walmart is now unbeatable because they're so big, they can demand wholesale prices that no one else can. If Walmart wants to buy 100M tomatoes from you, you'd sell them barely above cost because otherwise you're stuck with more tomatoes than you could ever sell. To put it another way: you can't compete with these companies because they abuse their market power (either directly or through regulatory capture), not because they're actually that good at anything. 1. https://fourweekmba.com/amazon-vs-walmart/ https://fourweekmba.com/amazon-vs-walmart/

xyzzy123 3y ago
Personally I think it's both - they execute incredibly well given their scale AND they abuse their market power.
- echelon 3y ago
  > Personally I think it's both - they execute incredibly well given their scale AND they abuse their market power. They execute well to clear the competitive landscape. Then just well enough to prevent new competition from exploiting a subpar performance gradient. Success grows fat off of easy cash flows instead of staying nimble. That's every major tech company and most big conglomerates.
  - bobthepanda 3y ago
    Walmart also has a hedge in that IIRC its initial expansion was in rural areas neglected by most department store/big box chains. If anything, the dollar stores represent more of a threat to Walmart.
    - bombcar 3y ago
      The dollar stores around here pose no threat, except maybe in the area of helium balloons. The jump to being a five dollar store that the other one did is doomed to failure.
      - thebears5454 3y ago
        Dollar stores are certainly stealing a lot of Walmarts lunch in rural illinois and Iowa. Why would you go 35min to Walmart if you just need 10 things when there's a dollar store 10 min away that's almost the same price as Walmart and much better shopping experience.
        jstarfish 3y ago
        Yeah, and they're one of the reasons the poor stay poor. Dollar stores are a terrible value. Walmart made a name for itself with its "rollback" program, where products would appear cheaper than competitors' because the SKU contained one less ounce/gram/unit. Dollar stores takes Walmart's own game to extremes; you buy a quart of watered-down bleach for $2, where buying an entire gallon (4x the volume) of the real thing would cost you $3 at Walmart. Or, $20 for a 14-pack of Monster drinks at Walmart is a terrible deal when they're "just" $3 (each) at the gas station! You see the same thing with people buying individual packs of cigarettes instead of an entire carton. The math works against them. They don't understand it.
        bobthepanda 3y ago
        Sometimes it’s not about understanding. There was a analysis, recently, that amongst users of the New York subway, the most common fare type amongst the poor was the pay per ride card. Even though it had the highest per-ride cost, it turns out that poor people living paycheck to paycheck simply cannot stump up the upfront cash to pay for the better deal. (As a result the new fare system combines both with automatic caps on pay as you go fares.)
        thebears5454 3y ago
        You're missing the entire point of my comment.
pers0n 3y ago
Aldi has better prices on meat and produce, I just wish they would start building more of them
- pif 3y ago
  > Aldi has better prices For the same quality? With the same workers' rights? With at least ea liveable profit for their providers?
bombcar 3y ago
Walmart is also flying up fast behind Amazon in everything but running a cloud service, and they’ve surged past on a number of things for me. I’ll let Prime expire and see if the ghost of Sam Walton can get me to go for WalmartPrime™.
- Clent 3y ago
  I live in fly over country. Amazon Prime still cannot offer same day delivery. But Walmart+ can. As terrible as Walmart is, Amazon is a worse brand. At this point, I'd rather direct my fund towards the ghost of Walton who during his life treated employees with respect versus a company that can only maintain profitability by treating workers terribly.
  - dr_kretyn 3y ago
    A fly over country? Like, Greenland? And you have Walmart? I'm really curious what country are you from.
    - unmole 3y ago
      > Flyover country and flyover states are American phrases describing the parts of the contiguous United States between the East and the West Coasts. The origins of the phrases and the attitudes of their supposed users are a source of debate in American culture; the terms are often regarded as pejoratives, but are sometimes "reclaimed" and used defensively. https://en.wikipedia.org/wiki/Flyover_country https://en.wikipedia.org/wiki/Flyover_country
      - TexanFeller 3y ago
        I've been reclaiming the phrase to mean the coastal states. Living in TX, California and New York are what I fly over to get to actually good places in Asia and Europe.
    - Am4TIfIsER0ppos 3y ago
      As the sibling comment defined it I will point out the term was "flyover country" not "a flyover country"
Kronen 3y ago
You can't compare Walmart to Amazon, Walmart is a northamerican thing, Amazon is global. Walmart has zero influence in the prices of the tomatoes grown in Europe.
- solaarphunk 3y ago
  Walmart and Sam’s club China are reasonably significant. Not just a North American thing.
- TheCoelacanth 3y ago
  Their international scale is similar, though I'm sure not in exactly the same places. Amazon had $118 billion in non-US revenue in the most recent fiscal year while Walmart had $101 billion. If you limit it to only retail, Walmart probably comes out ahead.
- paganel 3y ago
  > Amazon is global. Alas, them deciding to shut-down Book Depository means I can't purchase English/American books anymore free of customs-related taxes (I live in a Eastern European EU county), which makes me not purchasing those books at all (in many cases the taxes would end up doubling the purchase price, so it's not worth it). I'll never forgive Amazon for that.
- deleted 3y ago
  [deleted]
broken_clock 3y ago
The chart shows that Walmart revenue has grown 18% in 7 years, well below US GDP growth. Maybe they haven't dented revenue, but it's entirely possible they've dented revenue growth. It also important to note that a corollary of this argument is that incumbents will still dominate their own sector - IBM still dominates mainframes. What matters to incumbents is whether or not those sectors are still relevant after disruption - mainframes less so, in-person grocery and shopping maybe more so.
- jondwillis 3y ago
  That’s also lower than inflation (napkin math) over the same period. Unless you’re already adjusting for it.
nostromo 3y ago
Keeping prices low is a great thing. I wish Walmart and Amazon every success in that endeavor. Abusing a monopoly is when you increase prices because you can. Offering lower prices is the opposite. If you can’t compete, then you’re in the wrong business.
- akdor1154 3y ago
  > Keeping prices low is a great thing. To a first approximation, yes, but this also forces things like small farmers and retailers being unprofitable, and all the societal changes that come with that, and of course then the tendency for consolidation and the inherent risk of more monopolisation from that. Free market is great when it's full and noisy and no-one is large enough to control or manipulate it, the aim should be to keep it in this state (because then keeping prices low falls out naturally without terrible second order effects)
  - arrozconcosas 3y ago
    Free markets also should allow winners and losers. Walmart wasn’t always big. It was a winner though.
    - isykt 3y ago
      You can have winners and losers and also quantify the non-capital externalities in order to account for them.
  - roenxi 3y ago
    > ...this also forces things like small farmers and retailers being unprofitable... Nobody is "forced" to be unprofitable. If a business is unprofitable it can shut down. You're putting half the no-win argument - when Amazon makes a big profit people complain they are too powerful. When they don't make a big profit, this is an argument that they've squeezed the supply chain too much. There is a tiny line here that is theoretically acceptable, and I doubt either side of the no-win argument agrees where it is. And this isn't what is driving the consolidation, the monopolisation is probably being driven by credit. Big players get much sweeter deals when dipping into the pool of printed money. If credit was not the driving force then it'd be much less common to see big conglomerates and small nimble players would have an easier time. Like how in housing credit booms tends to put smaller buyers in a worse position because they only end up living in about the same house as they already would have managed anyway but they have to sign away more of their life to get it.
refurb 3y ago
I disagree that Walmart abuses their market power. Any supplier is free to bid on a Walmart request. They can walk away if it doesn’t make economic sense to them. The Vlasic pickle story keeps coming up, but come on, Vlasic is huge, they knew what they were getting into. If they were stupid enough to agree to lose money on every single jar of pickles, they should re-examine their business strategy. Google tells me Walmart is 25.5% of all grocery sales. You can have a thriving business with the other 75% if you don’t think you can get a fair deal with Walmart.

by smt88 3y ago

xyzzy123 3y ago

Personally I think it's both - they execute incredibly well given their scale AND they abuse their market power.

echelon 3y ago
> Personally I think it's both - they execute incredibly well given their scale AND they abuse their market power. They execute well to clear the competitive landscape. Then just well enough to prevent new competition from exploiting a subpar performance gradient. Success grows fat off of easy cash flows instead of staying nimble. That's every major tech company and most big conglomerates.
- bobthepanda 3y ago
  Walmart also has a hedge in that IIRC its initial expansion was in rural areas neglected by most department store/big box chains. If anything, the dollar stores represent more of a threat to Walmart.
  - bombcar 3y ago
    The dollar stores around here pose no threat, except maybe in the area of helium balloons. The jump to being a five dollar store that the other one did is doomed to failure.
    - thebears5454 3y ago
      Dollar stores are certainly stealing a lot of Walmarts lunch in rural illinois and Iowa. Why would you go 35min to Walmart if you just need 10 things when there's a dollar store 10 min away that's almost the same price as Walmart and much better shopping experience.
      - jstarfish 3y ago
        Yeah, and they're one of the reasons the poor stay poor. Dollar stores are a terrible value. Walmart made a name for itself with its "rollback" program, where products would appear cheaper than competitors' because the SKU contained one less ounce/gram/unit. Dollar stores takes Walmart's own game to extremes; you buy a quart of watered-down bleach for $2, where buying an entire gallon (4x the volume) of the real thing would cost you $3 at Walmart. Or, $20 for a 14-pack of Monster drinks at Walmart is a terrible deal when they're "just" $3 (each) at the gas station! You see the same thing with people buying individual packs of cigarettes instead of an entire carton. The math works against them. They don't understand it.
        bobthepanda 3y ago
        Sometimes it’s not about understanding. There was a analysis, recently, that amongst users of the New York subway, the most common fare type amongst the poor was the pay per ride card. Even though it had the highest per-ride cost, it turns out that poor people living paycheck to paycheck simply cannot stump up the upfront cash to pay for the better deal. (As a result the new fare system combines both with automatic caps on pay as you go fares.)
        thebears5454 3y ago
        You're missing the entire point of my comment.

pers0n 3y ago

Aldi has better prices on meat and produce, I just wish they would start building more of them

pif 3y ago
> Aldi has better prices For the same quality? With the same workers' rights? With at least ea liveable profit for their providers?

bombcar 3y ago

Walmart is also flying up fast behind Amazon in everything but running a cloud service, and they’ve surged past on a number of things for me. I’ll let Prime expire and see if the ghost of Sam Walton can get me to go for WalmartPrime™.

Clent 3y ago
I live in fly over country. Amazon Prime still cannot offer same day delivery. But Walmart+ can. As terrible as Walmart is, Amazon is a worse brand. At this point, I'd rather direct my fund towards the ghost of Walton who during his life treated employees with respect versus a company that can only maintain profitability by treating workers terribly.
- dr_kretyn 3y ago
  A fly over country? Like, Greenland? And you have Walmart? I'm really curious what country are you from.
  - unmole 3y ago
    > Flyover country and flyover states are American phrases describing the parts of the contiguous United States between the East and the West Coasts. The origins of the phrases and the attitudes of their supposed users are a source of debate in American culture; the terms are often regarded as pejoratives, but are sometimes "reclaimed" and used defensively. https://en.wikipedia.org/wiki/Flyover_country https://en.wikipedia.org/wiki/Flyover_country
    - TexanFeller 3y ago
      I've been reclaiming the phrase to mean the coastal states. Living in TX, California and New York are what I fly over to get to actually good places in Asia and Europe.
  - Am4TIfIsER0ppos 3y ago
    As the sibling comment defined it I will point out the term was "flyover country" not "a flyover country"

Kronen 3y ago

You can't compare Walmart to Amazon, Walmart is a northamerican thing, Amazon is global. Walmart has zero influence in the prices of the tomatoes grown in Europe.

solaarphunk 3y ago
Walmart and Sam’s club China are reasonably significant. Not just a North American thing.
TheCoelacanth 3y ago
Their international scale is similar, though I'm sure not in exactly the same places. Amazon had $118 billion in non-US revenue in the most recent fiscal year while Walmart had $101 billion. If you limit it to only retail, Walmart probably comes out ahead.
paganel 3y ago
> Amazon is global. Alas, them deciding to shut-down Book Depository means I can't purchase English/American books anymore free of customs-related taxes (I live in a Eastern European EU county), which makes me not purchasing those books at all (in many cases the taxes would end up doubling the purchase price, so it's not worth it). I'll never forgive Amazon for that.
deleted 3y ago
[deleted]

broken_clock 3y ago

The chart shows that Walmart revenue has grown 18% in 7 years, well below US GDP growth. Maybe they haven't dented revenue, but it's entirely possible they've dented revenue growth. It also important to note that a corollary of this argument is that incumbents will still dominate their own sector - IBM still dominates mainframes. What matters to incumbents is whether or not those sectors are still relevant after disruption - mainframes less so, in-person grocery and shopping maybe more so.

jondwillis 3y ago
That’s also lower than inflation (napkin math) over the same period. Unless you’re already adjusting for it.

nostromo 3y ago

Keeping prices low is a great thing. I wish Walmart and Amazon every success in that endeavor. Abusing a monopoly is when you increase prices because you can. Offering lower prices is the opposite. If you can’t compete, then you’re in the wrong business.

akdor1154 3y ago
> Keeping prices low is a great thing. To a first approximation, yes, but this also forces things like small farmers and retailers being unprofitable, and all the societal changes that come with that, and of course then the tendency for consolidation and the inherent risk of more monopolisation from that. Free market is great when it's full and noisy and no-one is large enough to control or manipulate it, the aim should be to keep it in this state (because then keeping prices low falls out naturally without terrible second order effects)
- arrozconcosas 3y ago
  Free markets also should allow winners and losers. Walmart wasn’t always big. It was a winner though.
  - isykt 3y ago
    You can have winners and losers and also quantify the non-capital externalities in order to account for them.
- roenxi 3y ago
  > ...this also forces things like small farmers and retailers being unprofitable... Nobody is "forced" to be unprofitable. If a business is unprofitable it can shut down. You're putting half the no-win argument - when Amazon makes a big profit people complain they are too powerful. When they don't make a big profit, this is an argument that they've squeezed the supply chain too much. There is a tiny line here that is theoretically acceptable, and I doubt either side of the no-win argument agrees where it is. And this isn't what is driving the consolidation, the monopolisation is probably being driven by credit. Big players get much sweeter deals when dipping into the pool of printed money. If credit was not the driving force then it'd be much less common to see big conglomerates and small nimble players would have an easier time. Like how in housing credit booms tends to put smaller buyers in a worse position because they only end up living in about the same house as they already would have managed anyway but they have to sign away more of their life to get it.

refurb 3y ago

I disagree that Walmart abuses their market power. Any supplier is free to bid on a Walmart request. They can walk away if it doesn’t make economic sense to them. The Vlasic pickle story keeps coming up, but come on, Vlasic is huge, they knew what they were getting into. If they were stupid enough to agree to lose money on every single jar of pickles, they should re-examine their business strategy. Google tells me Walmart is 25.5% of all grocery sales. You can have a thriving business with the other 75% if you don’t think you can get a fair deal with Walmart.