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Online battle royal: Amazon vs. Wal-Mart

July 15, 2015 05:10 PM
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Two of the world’s largest online retailers clashed online Wednesday, as Amazon.com Inc. held its much-hyped Prime Day and Wal-Mart Stores Inc. launched a counter-promotion in an effort to keep shoppers from choosing Amazon’s members-only program.

Data shows and experts agree the edge, especially on pricing, goes to Amazon, No. 1 in the Internet Retailer 2015 Top 500 Guide.

 “They were the first to the punch with the promotion, and they can lose money on all of their sales and still come out significantly ahead through the immediate revenue, up-front cash collection and ultimately lifetime value of the added Prime sign-ups,” says Alex Rink, CEO of pricing monitoring firm 360pi.

Amazon on July 6 announced Prime Day as a 20th birthday/anniversary celebration full of special sales for customers of its loyalty program, Amazon Prime, which gives members free two-day shipping on 20 million items for $99 a year and includes other services such as free streaming video and e-books. Wal-Mart began offering new discounts Tuesday, the day before Prime Day, for all consumers and lowered its minimum threshold for free shipping to $35 from $50, matching what Amazon charges consumers who are not part of Prime.

When it came to prices on similar products, data shows Amazon went  lower than Wal-Mart, No. 3 in the Top 500 Guide, more often than not. Both retailers engaged in a pricing war throughout the day, often matching each other head-to-head depending on the time of day. Difference in price between the two sites on the same object sometimes was as little as 3 cents.

“Amazon is winning on 36 out of 40 best-sellers consistently,” says Vaibhav Bhat, a solutions manager with online price monitoring service Ugam. “For best-sellers, on products which have a match, Amazon is priced 80 cents lower on average.”

Bhat says Ugam’s data suggests that Wal-Mart simply chose not to get into a pricing war with Amazon as the day went on. “The pricing gap between Amazon and Wal-Mart on items promoted by Amazon and which are found on Walmart.com is quite large and not competitive,” he says. “Prices seem to be consistently lower on Amazon.”

By choosing to go head-to-head with Amazon, Rink thinks Wal-Mart may have eroded some of the trust its shoppers had in the company.

“Effectively, Amazon comes away looking like they are delivering a winning proposition for shoppers while Wal-Mart, by countering Amazon with the promise of more rollbacks, inadvertently undermined trust in their brand as the lowest-price retailer that always passes on savings to you,” he says.

But on social media, Amazon had a rough day. Data from the Adobe Digital Index, which measured more than 4 million mentions across social channels, showed that while Amazon’s mentions were up 50% over the 30-day average, half of the sentiment expressed was disappointment, with only 23% expressing joy.

Adobe’s data shows that Wal-Mart didn’t experience a social media bump.

 

 

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