Let the promotional battle begin.
This story first appeared in the July 14, 2015 issue of WWD. Subscribe Today.
There are a couple big differences between the two promotions: Prime Day will only be available to Amazon Prime members, who pay the $99 yearly fee for free two-day shipping and other perks, while Wal-Mart’s deals will last for longer — the exact length of the offers has yet to be disclosed — and be available to all shoppers. (Wal-Mart’s will also lower its minimum order size for free shipping to $35 from $50).
Wal-Mart let some of its snark show in calling out the differences.
“We’re kicking off some awesome deals this week that will be available for everybody with no hidden costs or admission fees, and they won’t be available for just one day,” said Fernando Madeira, president and chief executive officer of walmart.com, adding that thousands of deals will start this week.
Wal-Mart has been gunning for Amazon for some time and over the past few years been pursuing an aggressive digital strategy, buying up tech companies and rolling out new omnichannel services.
Neil Ashe, president and chief executive officer of the retailer’s Global eCommerce unit, said in 2013: “We’re building a global technology platform whose goals are as simple, frankly, as they are audacious. We want to know what every product in the world is. We want to know who every person in the world is. And we want to have the ability to connect them together in a transaction.”
With their most-recent sales events, both Wal-Mart and Amazon are channeling e-commerce giant Alibaba, which created Single’s Day, the online shopping holiday that takes place every Nov. 11 in China and drew sales of over $9 billion last year. An Amazon spokeswoman said it wasn’t decided whether or not Prime Day would become an annual holiday à la Single’s Day. The e-tail giant won’t reveal sales goals for the day, but already acknowledged that the day would be expensive for them.
While Amazon said it launched Prime day to celebrate its 20th anniversary, merchants have long been quick with a sale when they want to drive traffic.
Experts are divided on who will come out on top in the promotional smackdown or even whether either side ultimately boost profits by cutting prices.
Patrick Moorhead, president and principal analyst at Moor Insights and Strategy, said Wal-Mart’s upcoming promotions are more than just a tit-for-tat game with Amazon.
“Wal-Mart should be very nervous about Prime Day, as anything that takes consumers’ hearts away from Wal-Mart is a risk,” Moorhead said. If Prime Day is a success, he envisions Amazon running similar offers on a monthly basis, which in his opinion “could hurt Wal-Mart very badly.”
For Moorhead, Wal-Mart and Amazon’s actions are indicative of not only the two retailers squaring off, but of a more promotional July in general. Right now, July 4 is the “only excuse” for a sale during the slower summer month, and the goal overall is to create a more exciting retail environment during this time and get more consumers shopping online.
“The gift card and retail industry has come together to invent excuses for a sale,” Moorhead said. “Look at Admin Day, Boss’ Day, Sweetest Day. All invented and nothing to have anything to do with a religious or historical celebration. It’s all marketing and promotion.”
Some disagree. Wal-Mart’s brick-and-mortar presence, combined with a fast-growing online business, could strengthen the retailer’s position against Amazon with its e-commerce base.
“The trail Wal-Mart is poised to blaze should have Amazon worried,” said Martin McNulty, chief executive officer of digital agency Forward 3D. “People love to imagine a world of robots doing the cleaning and intelligent refrigerators that order your milk for you, but it’s much more mundane than that.”
He acknowledged that while Amazon has been smart about discounting delivery through Amazon Prime memberships, most consumers still don’t turn to Amazon for their weekly shop.
He lauded Amazon for being an innovate in the online space. But if they can’t back up their innovations with scale, then rivals such as Wal-Mart will come in and replicate these efforts — and likely do a better job, he said.
“With loyalty data, advanced distribution systems and multiple store locations, the real winner…could, in fact, be Wal-Mart,” McNulty said. “Wal-Mart has the opportunity to map your consumption of the most inane products and create seamless experiences for you that move beyond your desktop or even your phone.”