Watching one of my favorite shows this afternoon on CNBC, they played a game, Would you Rather with Target, Walmart or Amazon. I found their discussion interesting as many of them picked Amazon, or Target over Walmart. Since they didn't ask me, I thought I would write my 2 cents.
I feel there is one winner as the other 2 are trying to catch up. The analyst on the show stated that Amazon will try to squeeze profits from Walmart and Target. I don't think they account for the high over head cost Amazon has between delivery, warehouses and employees to run those locations. Amazon clearly doesn't have the overhead of running a retail location, but that is nominal when you consider a couple other factors that retail locations allow.
Retail locations allow people to feel, touch and try. You can't get that experience online. Retail locations also have the ability to take cash and food stamps that you can not do on Amazon's website. When people use other forms of payments including food stamps, many times they buy other things in addition to food. This ultimately leads to the realization that Amazon does not cater to low income families with make up a large percentage of households in the United States.
Amazon might be a better play if you consider their business web services and video services. However, Amazon has increased the price of their Prime membership to increase profits while shrinking delivery times by a day. While Amazon collects a monthly fee for their services, Walmart provides the same delivery service with no membership.
Each company has spent money in the past couple of years to improve. Amazon bought Whole Foods for a retail food presence that also expands their Prime Membership reach for great synergy as Whole Foods caters to a more affluent customer. Target spent money to improve their stores in the past year, but I didn't really see a difference. Walmart on the other hand spent money to acquire Flipkart which is the leading online retailer in India, the 2nd largest country by population in the world. So each company has spent money to expand their businesses rather than wasting on share buybacks.
From the investments the companies made, I believe Walmart's purchase of Flipcart was the most aggressive that will benefit them the most in the long run. Walmart already has a great online presence so adding Flipkart jumped them in front of Amazon in India. Flipkart's synergy is great as Walmart's website is a marketplace where a variety of sellers also sell products like Amazon.
In addition, Walmart also has it's own brand of products they sell for a higher profit margin to comparable name brands on the shelf. And Walmart even sells low cost value based items in that are similar to what you could get at a Family Dollar, Dollar Tree or Five Below. I do realize that Target does similar things to Walmart, but ultimately Target appears to be a different version of K-Mart which eventually disappeared.
To avoid the fate of K-Mart, Target needs to improve their online presence to the point someone wants to use their app to search for things first like Amazon and Walmart. Target must create a marketplace for other sellers so their may profit from seller fees. Target must also improve their value based presence. To me, there are too many things that Walmart already does well that Target isn't in the same league as Amazon and Walmart
All factors considered, I believe Walmart is the best bargain for your investment dollars of the 3 with Amazon in a close 2nd due to their server business. Amazon could get in front of Walmart if they were to take advantage of a major retailer going out of business like Sears or JC Penny's who have locations and their own brands.
I feel there is one winner as the other 2 are trying to catch up. The analyst on the show stated that Amazon will try to squeeze profits from Walmart and Target. I don't think they account for the high over head cost Amazon has between delivery, warehouses and employees to run those locations. Amazon clearly doesn't have the overhead of running a retail location, but that is nominal when you consider a couple other factors that retail locations allow.
Retail locations allow people to feel, touch and try. You can't get that experience online. Retail locations also have the ability to take cash and food stamps that you can not do on Amazon's website. When people use other forms of payments including food stamps, many times they buy other things in addition to food. This ultimately leads to the realization that Amazon does not cater to low income families with make up a large percentage of households in the United States.
Amazon might be a better play if you consider their business web services and video services. However, Amazon has increased the price of their Prime membership to increase profits while shrinking delivery times by a day. While Amazon collects a monthly fee for their services, Walmart provides the same delivery service with no membership.
Each company has spent money in the past couple of years to improve. Amazon bought Whole Foods for a retail food presence that also expands their Prime Membership reach for great synergy as Whole Foods caters to a more affluent customer. Target spent money to improve their stores in the past year, but I didn't really see a difference. Walmart on the other hand spent money to acquire Flipkart which is the leading online retailer in India, the 2nd largest country by population in the world. So each company has spent money to expand their businesses rather than wasting on share buybacks.
From the investments the companies made, I believe Walmart's purchase of Flipcart was the most aggressive that will benefit them the most in the long run. Walmart already has a great online presence so adding Flipkart jumped them in front of Amazon in India. Flipkart's synergy is great as Walmart's website is a marketplace where a variety of sellers also sell products like Amazon.
In addition, Walmart also has it's own brand of products they sell for a higher profit margin to comparable name brands on the shelf. And Walmart even sells low cost value based items in that are similar to what you could get at a Family Dollar, Dollar Tree or Five Below. I do realize that Target does similar things to Walmart, but ultimately Target appears to be a different version of K-Mart which eventually disappeared.
To avoid the fate of K-Mart, Target needs to improve their online presence to the point someone wants to use their app to search for things first like Amazon and Walmart. Target must create a marketplace for other sellers so their may profit from seller fees. Target must also improve their value based presence. To me, there are too many things that Walmart already does well that Target isn't in the same league as Amazon and Walmart
All factors considered, I believe Walmart is the best bargain for your investment dollars of the 3 with Amazon in a close 2nd due to their server business. Amazon could get in front of Walmart if they were to take advantage of a major retailer going out of business like Sears or JC Penny's who have locations and their own brands.
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