Q1: Analyze Amazon.

com and Walmart using the value chain and competitive

forces models.
Answer:
Competitive forces models: Amazon and Walmart are both competitors in the real
world as well as in online retail.
- Amazon already has a giant presence on the internet with everyone purchasing
electronics to books to now grocery with Amazon acquiring Whole Foods. This new
form of grocery shopping has made the task easy for everyone, a few clicks on a
screen and you have a week’s worth of groceries. Where Amazon exceeds the most
is their variety of goods and many price tags, giving different kinds of buyers different
kinds of options.
- However, Walmart is stuck to the confines of its physical stores, and their online
shopping is in its infancy while Amazon has been around for a while.
- The competitive forces models
+ Traditional competitor: Amazon vs Walmart competition in the marketplace
+ Low-cost leader: Amazon and Walmart provide the lowest price to customers
and keep competing in the lowest price
+ Newmarket entrants: both are the biggest company in E-commerce and
physical stores
+ Substitute Products and Services: the competition in discount of two
companies is prominent
Value chain models:
- In the e-commerce world, Amazon is the big shark. But in the grocery pool, it’s still
a small fish. The company currently dominates online grocery sales. "We bring the
items to your doorstep. You don’t have to fight through traffic or find a parking
space.” But when it comes to shopping in actual grocery stores, the picture changes.
Whole Foods accounts for a small fraction of industry sales, while major players like
Walmart, Kroger, Costco, and Dollar General dominate and are rapidly improving
their in-store and online experiences.
- Walmart is the biggest grocery store in America and while it’s trying to compete with
Amazon in the online retail market they have not penetrated the market the way
Amazon has with their diverse product range (Amazon Prime; same day, one day or
two-day shipping; also including their partnership with Kindle). Walmart is learning
from their competitors by offering delivery options to their loyal customers, just as
Amazon is. It also has a legendary continuous inventory replenishment system that
starts restocking merchandise as soon as an item reaches the checkout counter.
Walmart's efficiency, flexibility, and ability to fine-tune its inventory to carry exactly
what customers want have been enduring sources of competitive advantage.
Walmart also has a significant physical presence, with stores all across the United
States and in many other countries, and its stores provide the instant gratification of
shopping, buying an item, and taking it home immediately, as opposed to waiting
when ordering from Amazon. However, Walmart can lose money selling a hot
product at extremely low margins and expect to make money on the strength of the
large quantities of other items it sells.

Q2: Compare the role of grocery sales in Amazon and Walmart’s business
strategies.
Answer:
While they both sell loads of products, Amazon and Walmart vary in where their
money comes in from. Amazon is an e-commerce and Walmart is primarily physical
stores with the exception of their online store.

Amazon’s main business strategy is having the range to offer their customers and
great delivery options to keep their customers coming back. As customers rely more
heavily on the ease, speed, and convenience of e-commerce, they will increasingly
extend those online buying habits to grocery shopping. A study commissioned by the
market-research firm Euromonitor projects that the online market is projected to grow
15 times faster than the rest of the restaurant business through the end of the
decade. Even as Walmart and other retailers increase their online grocery presence,
Amazon will have plenty of opportunities to nab customers, including its more than
49 million Prime members.

Walmart, the world’s biggest retailer, has been remodeling stores in addition to
investing and testing in click-and-collect programs, stand-alone grocery pick-up sites,
and scanning and paying for items with smartphones. Shortly after Amazon
purchased Whole Foods to grab a foothold in the grocery business, Walmart decided
to promote the distribution of its own grocery delivery service. Walmart’s main focus
is on their physical stores as it's where most, if not all their sales come from, but they
are trying to get into the e-commerce business and loyalty programs. Amazon's entry
into the grocery business is not a slam dunk. But consumers have long indicated that
they want an omnichannel experience when they shop, as well as the added
flexibility of being able to pick up their orders at store locations.

Q3: What role does information technology play in these strategies?

Answer:
Walmart is crafting a strategy that gives consumers the best of both worlds—what is
called an omnichannel approach to retailing. Walmart's management believes the
company's advantage is that it is not a pure-play e-commerce retailer and that
customers want some real interaction with physical stores as well as digital. Walmart
will sell vigorously through the web and also in its physical stores, retaining its
hallmark everyday low prices and wide product assortment in both channels, and
using its large network of stores as distribution points. Walmart's website monitors
prices at other retailers and lowers its online prices if necessary. It is also increasing
the number of third-party retailers to compete with Amazon's vast field of suppliers.
That helps increase the number of items available to customers without Walmart
having to create new shipping logistics chains. For Walmart as they are relatively
new, their information technology isn’t as complex as Amazon but to compete with
them they need one, so they can offer their services online. Walmart is developing a
smartphone app that will allow customers to order items from Walmart.com if the
local physical store is out of stock. Walmart’s Sam’s Clubs are testing a new
subscription service that will allow customers to order items online but not have to
pay shipping fees. Walmart will closely integrate online shopping and fulfillment with
its physical stores so that customers can shop however they want, whether it's
ordering on their mobile phones for home delivery, through the in-store pickup, or by
wandering down the aisles of a Walmart superstore.

It looks like Amazon is trying to innovate in physical retail store sales as well as
online. Amazon has opened retail bookstores in Seattle, Chicago, San Diego, and
other U.S. locations featuring Amazon electronic devices as well as books. It is
thinking about moving into the grocery business as well as retail stores for furniture
and appliances. These are retail experiences that lend themselves less easily to
online purchasing because customers like to see and feel these types of goods in
person. Amazon set up a physical grocery store in downtown Seattle called Amazon
Go that is designed around an app that is able to place the items customers buy in a
digital shopping cart so they can leave the store without waiting in a checkout line.
The system automatically charges the credit card linked to the customer's Amazon
account and even knows when that person puts something back.

Q4: Which company is more likely to dominate grocery retailing? Explain your
answer.
Answer:
They both have undeniable strengths in grocery, and their prospects for the future
are bright. Amazon and Walmart both expect to be #1 in every venture that they
enter into. It depends largely on their business model.

It’s very easy to say Amazon is more likely to dominate grocery retailing because
they have such an online presence and a loyal following from every customer
purchasing things daily. Amazon is a master at providing what it calls "consumer
convenience". Americans are ordering more of their groceries and meals online. A
study commissioned by market research firm Euromonitor predicts that the online
market is expected to grow 15 times faster than the rest of the restaurant business
until the end of the decade. Not to mention their products and prices, Amazon Prime
services with many discounts (As of September 2017, Prime had 49 million
subscribers in the United States, representing about 44% of households),... and now
Whole Foods that increase physical store competitiveness in the grocery market. It
takes Amazon’s physical presence to a new level, with more than 460 stores in the
United States, Canada, and Britain. Amazon may continue to sell groceries online,
but it may also establish a presence in physical retail stores. To be clear, Amazon is
not only a great online store at your fingertips with goods delivered to your door
within 1-2 business days but it is also doing a great job when it comes to providing a
great customer experience about direct grocery shopping. The primary goal of
Amazon’s grocery growth is to continue its vision as a one-stop shop for all of a
consumer’s needs. The ultimate goal will eventually be to dethrone the incumbent
Walmart and redefine the way consumers shop for groceries. So yes, Amazon is
more likely to dominate grocery retailing.
But that’s not to say that Walmart can’t compete, they have the potential. It has been
the United States’ top grocer for many years, but it isn’t the main e-commerce
destination of choice. Its e-commerce growth has been impressive in the United
States, Walmart’s online order and pickup service were available at 2,000 stores by
the end of 2018. If Walmart can somehow captivate more and more customers into
purchasing online, they can surely have a competitive edge against Amazon,
especially with the presence of their physical stores. Time will tell if it is enough to
make Walmart.com the #1 grocery destination or if it will remain in a distant second
place.