Can Walmart REALLY Compete With Amazon? Not Yet.

By | April 4, 2017

Updated at the end of the post to show how Walmart reacts when things go wrong.

The stories about Walmart and Amazon going into an epic battle for world domination are everywhere. Walmart is forcing vendors to drop their prices or face penalties. Amazon wants manufacturers to redesign their packaging so it is more functional for shipping and even start selling directly to consumers. Walmart bought jet.com and its founder to compete with Amazon. Amazon is leasing its own jets to drive down distribution costs. And on and on and on.

Make no mistake, this is war.

Amazon’s Big Gun (besides selection and price) in the e-commerce war has long been Amazon Prime, which started out as a two-day delivery service and has grown into many other things as part of its $99 per year price. Walmart tried to answer that with a $49 yearly program that pretty much only promised two-day shipping. Response to that offering was lukewarm at best, so Walmart changed it to free two-day delivery on orders of $35 or more.

Walmart Two Day Shipping Ad

Full disclosure: I’ve been an Amazon Prime customer since the beginning and use the service for shipping, video, music, and more. But I’ve learned that Amazon doesn’t always have the best prices and has moved many items into their subpar Prime Pantry service. Now, I can’t always get what I want in two days or at the lowest price.

So I tried an experiment. I ordered from Walmart.com and bought just enough to pop over the $35 free shipping amount. Items from all around the website as shown below.

Walmart.com order

Six items: 2 bags of Easter (seasonal item) jelly beans, one package of incredibly inexpensive (less than half of what Amazon wanted for a similar product) microwave popcorn, a large bottle of hand soap, house brand acid reducer, and a pair of shorts. Total with tax-$37.65. I placed the order, got an almost instant confirmation, just like from Amazon, and waited to see when my stuff would be here. Could Walmart get it all here in two days? In fairness to them, I placed the order on Sunday, April 2 after their 2PM cutoff for two-day delivery, so the clock really started on Monday, April 3.

UPS tracking

Fedex shippment infoAnd that’s when I began to doubt that Walmart is really up to the challenge of going up against Amazon. I started getting shipment notifications from Fedex and UPS telling me my items were headed my way. But unlike an Amazon order where most if not all of the items would be coming in one box from one distribution center, the six items were coming to me in four packages from three different parts of the country.

Jelly beans and popcorn in one box from a Walmart store about fifteen miles from my house, hand soap in another box from the same store, shorts direct from the factory in South Carolina (I’m in Missouri) and acid reducer from a “walmart.com” facility in Georgia.

NOW WAIT A DOGGONE MINUTE HERE. That’s a lot of merchandise moving around the country. Walmart is using a brick and mortar store, some other facility (maybe a store, but I doubt it) that they run, and having a manufacturer pull and drop ship a single item. What happened to the Walmart-owned jet.com facility across the state in Kansas City? I’ve ordered from jet.com and gotten even more varied assortments of goodies in one box in two days. Even with logistics mastermind Marc Lore now running Walmart’s e-commerce, they HAVE to be able to do better than they did with this order.

I know most customers don’t care how items they order online get to them as long as they get them cheap, fast, and undamaged. And Walmart will almost certainly do as they promised, get the order to me in two days. Heck, the jelly beans and hand soap are Fedex and UPS trucksalready here, the day after the order clock started. But behind the scenes, Walmart has to pay to ship all this stuff. Unlike Amazon, who consolidates pallets of deliveries to the nearest distribution point, Walmart seems to be relying wholly on Fedex and UPS to get things from point to point.

I’m sure Walmart has a better deal with these services than I can get, but I checked the shipping charges for each package on the website of the service that is shipping the item. The “rate card” to ship all this stuff the way Walmart did is $39.06. Remember, the order, including tax, was $37.65. Even it Walmart pays a third of “rate card” for shipping, how can they make money this way?

Walmart isn’t new to selling online. I remember buying my son’s first car seat in the summer of 1996 from Walmart.com, and it came about a week later. It was drop shipped from the factory with a fax copy of the order as the shipping label. But Amazon has perfected the logistics, they’re working on drone deliveries, and Amazon Prime is a behemoth.

As far as Walmart, even if consumers don’t notice, shareholders do. This is no way to run a railroad.


Update Wednesday, April 5, 2017

Train wreckThat railroad has had a train wreck. When this post was written, it seemed like the items that were supposed to be delivered on April 5 were on track to arrive on time. But April 5 came and the UPS package from Atlanta was in Nashville and the Fedex package from South Carolina was hanging out in Charlotte. So I went to the Walmart website to see how they were going to handle this situation.

Here is the online chat session that took almost 45 minutes because of the massive time between my questions and “Nixon M”‘s responses.

Nixon M.: Thanks for chatting with Walmart.com! I’m Nixon M. and I’ll be assisting you today.
Nixon M.: Hello, Mark.
Nixon M.: It is going to be a pleasure assisting you today.
Nixon M.: I am very sorry to hear your order will arrive late.
Nixon M.: I’m going to review your order so I can provide you the accurate information. For security purposes, can you please provide your full billing address?
Mark: Hopefully you got my info already. I ordered items that were supposed to be here by today, and 2 of the 4 packages won’t be here until tomorrow. I bought from you because of the 2 day shipping. I’m not a happy man.
(home address removed)
Nixon M.: Thank you for the information provided, please allow me a moment to review your order and get back to you.
Mark: OK
Nixon M.: Thanks.
Nixon M.: Thank yo so much for waiting Mark. I was checking your order and your are correct are 2 items that will be delivered tomorrow Thu 4/06/2017 by end of day and not today as was expected from the fulfillment center. Unfortunately we do not have control over the carrier. But in order to assist yo, I can offer a 10% discount for your items due this inconvenience. Is hat ok?
Mark: Nor really. You have to be able to do better than that. When Amazon misses a deadline, they give a month of Prime. 10% on only the missing items is not acceptable.
Mark: How do you expect to keep customers if you can’t deliver on time?
Communication with the Walmart Chat service has been lost. Please wait while attempts are made to restore the connection. 
Disconnection in 240 seconds. 
Connection resumed. 
Mark: Very nice touch disconnecting me but I’m waiting for an answer.
Nixon M.: Sure, Mark. I can understand your frustration and disgusting about this issue and in this program we are getting some feedbacks and things we are reporting to our higher department to improve this service and avoid things will happen again.
Nixon M.: I am very sorry Mark. I am able to provide just he 10% discount in according with the price of the items.
Mark: So you don’t want my business again because now I can’t trust you to get your orders delivered as promised?
Mark: At least 10% on the ENTIRE ORDER, still not enough to make me happy, but it would be a good sign that Walmart cared about missing the delivery.
Nixon M.: Sure, I am very sorry that you did not receive your order in the 2 day shipping for this 2 items. I am really sorry I would really like to offer you more than the 10% discount on this items. Unfortunately we are unable to this.
Mark: OK, I’ll take the $2.00 or whatever it comes out to and share our conversation on my blog. People might find your policies interesting. How will I get my money back?
Communication with the Walmart Chat service has been lost. Please wait while attempts are made to restore the connection. 
Disconnection in 240 seconds. 
Connection resumed. 
Nixon M.: Understood, Mark. I’ve issued a refund of $2.19 of the 10% discount ofered for your items. The refund will post to your original payment method within 5 business days.

So even after given different ways to solve the problem as well as telling “Nixon” what the competition does, Walmart stuck to their very lame “makegood” policy.

If I’m Amazon, I think that exchange would make me very happy. When it comes to efficiency, service, and being willing to give up a little to save a customer, Amazon wins on all three counts.

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  • Robin S

    Go get ‘ em, Tiger. <3