April 08, 2014

Wal-Mart Shoppers Prefer Amazon Over Wal-Mart's Own Website

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Anybody who has ever analyzed inter-channel dynamics knows a fundamental truth. The fundamental truth is this ... there are two types of retail businesses.

  1. Direct-Centric Retail Businesses.
  2. Retail-Centric Retail Businesses.
Retail-Centric Retail businesses struggle with direct channel sales ... sales totals that are frequently 15% or less of total net sales, on an annual basis. Most often, these businesses have an outstanding retail in-store experience. Wal-Mart counts - you may despise their business model, but they have a wide array of merchandise at everyday low prices. The Wal-Mart shopper doesn't need to shop the website, because the customer goes to the store. But the Wal-Mart shopper needs Amazon for different reasons.

If Wal-Mart were a direct-centric retail business (i.e. 30% or more of annual sales via the direct channel), then this story would have meaning. But the very reason Wal-Mart is not a direct-centric business is because they execute so darn well in stores.

The better the in-store experience, the worse e-commerce penetration typically is ... the customer doesn't need to shop the website ... the customer wants to shop in-store.

Analyze your own retail business, you'll see this truth repeat, over and over and over again.