As the holiday shopping pressure mounts, so do the demands on retailers. Two in particular--Wal-Mart and Amazon--are further developing a sharp rivalry. But can either provide the coup de grace? And how can entrepreneurs avoid the carnage and gain some advantage?
Both companies are giants in their respective realms. Wal-Mart has nearly 4,200 stores, not counting Sam's Club locations, in the U.S. alone where the company employs 1.3 million. It has the reputation of being a dominant discounter with an ability to run efficient logistics and operations.
Amazon is the big name in online retailing, employing more than 97,000 worldwide. The company has the heft to pressure its vendors, just as Wal-Mart does, and is notably good at logistics and automation.
The companies also share another characteristic: economic challenge. Amazon has been lately operating in the red as expensive experiments in developing electronic devices and other new ventures have hammered its usually thin margins. Wal-Mart's U.S. operations have been in decline. Investors in both companies are demanding better performance.
That has Wal-Mart and Amazon each eyeing the other's territory. The former is working to significant expand its e-commerce capabilities, in part by using its in-store personnel to fulfill orders. Wal-Mart may not have the automation and warehouse distribution system of Amazon, but, boy, does it have lower wage employees throughout the country and lots of room in many of its locations.
Amazon, on the other hand, wants to court traditional retail traffic, only without having to build a massive number of stores. The company has expanded its growing same-day delivery service and has unveiled a one-hour delivery concept in parts of Manhattan.
Each of the two, under pressure of economics and investors, is trying to become the other in a new form. This is actually excellent news for smaller companies. The easiest way to avoid conflict with large competitors is to have them wrestle with one another. Instead of trying to be something that they can't, at least in the short run, entrepreneurs should examine what they can do that large companies cannot. Hone customer service. Learn more about your customers' preferences and pleasures. Carry the types of products that require a more detailed sales process. That way you can let the big companies slug it out while you continue to do what only you can.