A Tale of Two Models
Introduction
In each unit, the students will be assigned discussion questions concerning unit topics, examine the presented topics, and complete the discussion tasks. After submitting the initial posting, the students will provide constructive criticism of at least two peers initial postings, including the perceived strengths, weaknesses, and specific opportunities for improvement.
The initial post should be a minimum of one page double spaced in length. Refer to the discussion rubric for grading criteria which includes using credible sources (properly cited in APA format) and linking in the units concepts and terms for critical analysis.
It is recommended that your use a word processer, such as MS Word and use both spell checking and grammar checking tools. You should expand your grammar checking tools in Word to cover any writing weaknesses (such as setting to Grammar and Style in Word). You can then copy and paste your post into the discussion forum. While there is no minimum or maximum word expectation for peer responses, they are expected to be substantive in nature and linked to credible sources. All work should reflect graduate-level critical thinking, as well as an ability to analyze, synthesize, and evaluate given scenarios and tasks.
Initial Post
You work for an investment firm that is considering making a $10 million dollar investment in either Walmart or Amazon. You are the marketing strategy advisor and need to post to your fellow advisors your evaluation of these companies Strategic Business Units (SBUs) and business models.
Review the material above and your course unit content. Conduct additional research from credible sources. Proper in-text citations and correctly formatted references should be prepared consistent with the APA (7th edition). Post responses to your assigned issues below. Then make and justify your final recommendation for investing the $10 million based on your assignment below by last name.
Discussion Issues: If your last name starts with A-L, respond to issue 1. If your last name starts with M-Z, respond to issue 2. In your Peer Response, respond to students who covered the other issue number.
- Last name starts with A-L: Evaluate the SBU acquisition/development strategy of Amazon and Walmart and how they are gaining synergies from these SBUs.
- Last name starts with M-Z: Describe the business models of Amazon and Walmart and identify key areas of value creation from these business models.
- All: Make and justify your final recommendation for investing.
Peer Responses
It is important that marketing professionals become comfortable receiving and giving constructive criticism. This is an important component in ones professional growth and development and a core competency for leaders. You will be expected to read the initial posting of at least TWO peers, and then provide constructive criticisms to their peers initial postings. You should highlight strengths as well as opportunities for improvement based on the Units concepts and terms:
- In your Peer Response, respond to students who covered the other issue number above.
- Point out what you perceived to be the strengths of the initial posting along with supporting rationale.
- Identify specific opportunities for improvement with regard to the content in the initial posting. Furthermore, you should provide supporting rationale for your stated position, as well as concrete suggestions and guidance intended to strengthen the effectiveness of the content.
Peer responses should be placed directly into the discussion thread and not attached as a separate document to a posting. For these responses, credible outside sources should be used to support the content within the postings, proper in-text citations and correctly formatted references should be prepared consistent with the APA (7th edition). The list of references should be physically positioned at the end of the postings.
Student 1
Describe Business Model between Amazon and Walmart:
Amazon’s business model has it’s largest growth in ecommerce. (Monteros, 2021). It has expanded it’s customer options through popup stores, physical locations and groceries. Amazon continues to grow beyond their technology of providing services for it’s customers through technology improvements. (Fox, 2021). Amazon is now taking advantage of it’s competitors brick and mortar stores by having pop-up locations for consumers to shop and offering 4 star or higher rated products.
Walmart’s business model has it’s largest growth in quality products offered at an affordable price inside their brick and motor stores or by online shopping. (Monteros, 2021). While the advantage Walmart has over Amazon is the ability for customers to walk in and want one item category and impulse buy several other items while visiting the stores. Walmart is expanding their use of their stores to serve as warehouses to quickly meet the needs of ecommerce customers. Walmart has over 1,000 stores verses Amazon’s 110 warehouses. The opportunity to spend less on shipping is how Walmart began to take a lead in shipping costs against Amazon. Their stock is cheaper too making Walmart a cheaper option for investment verses Amazon. (McBride, 2020).
Investment and Evaluation:
Both companies have stability and growth potential for investors. I would recommend investing in Amazon as they continue to gain on Walmart’s advantage of having physical stores to purchase and store products for both in person and ecommerce customers. If Amazon continues to grow their physical locations they will gain on Walmart’s already established stores and continue to gain profit in a new way. In addition, Amazon utilizes statistical data to keep up with trends and products customers are buying. Walmart does not have that same opportunity due to customers showing up in person. They can know what products are being purchased but specific customer groups or preferences cannot be tracked as easily as Amazon can. Amazon’s data is used to continue to suggested items to it’s customers by learning the patterns of what their customers view and purchase. (Pathek, 2020).
My recommendation would be to invest in Amazon due to the way they utilize customer information to ship products to them as quickly as possible. Currently Amazon is utilizing already established stores such as Kohl’s to expand the opportunity for customers to conduct business for fast product pick up or returns. This will make their overhead cost by renting space in already established stores more economical as well as expand the locations and speed for product delivery. One area Amazon is known to dominate with fast shipping and return options.
References:
Mentros, M. (2021, March 3). How Amazon and Walmart’s head-to-head competition is changing retail. Retail Dive. https://www.retaildive.com/news/how-amazon-and-walmarts-head-to-head-competition-is-changing-retail/595762/Links to an external site.
Fox, G. (2020, February 4). Amazon Business Model. GF Gary Fox. https://www.garyfox.co/amazon-business-model/Links to an external site.
Pathak, R. (2020, November 3 Updated 2021, May 6). How Amazon uses Big Data? Big Data. https://www.analyticssteps.com/blogs/how-amazon-uses-big-dataLinks to an external site.
McBride, S. (2020, August 8). Walmart Has Made A Genius Move To Beat Amazon. Forbes. https://www.forbes.com/sites/stephenmcbride1/2020/01/08/walmart-has-made-a-genius-move-to-beat-amazon/?sh=1ac68ea41119Links to an external site.
Student 2
The following is an evaluation of Amazon and Walmarts Business Models and identifies key areas of values for both companies. This evaluation will also help facilitate which company will work best when considering a $10 million dollar investment.
The Walmart business model, according to Pereira (2021), is based on brick-and-mortar retail, although Walmarts eCommerce is expanding quickly. They became adaptable by following technological advances and customer habits that are continuously changing. Despite the need for flexibility, Walmart claims to have not fundamentally changed on how it operates. According to Jack Neff, as of 2017, and pre-covid, Walmart had 12 straight quarters of sale-store sales growth. In order for Walmart to stay up float, they had to maximize their profits by adding services to their targeted customers, which are busy family consumers (Neff, 2017). These busy consumers are always seeking ways to minimize the time wasted doing routine chores, such as shopping. They are looking for convenience, saving money, and ways to shop faster. Walmart has made things simpler by adding drive-thru pick up groceries, installing automated kiosks for same-day pick up, redoing the inside of stores to become more eye appealing and advancing technology for increasement of checkout orders at Walmart.com. They have also improved their quality of produce by selling higher-ending products overall. Walmart has recently launched a competitive item against giant Amazon that may be a game changer. Walmart has rolled out a monthly Membership+ program that cost $98 per year. The Membership includes free shipping, no order minimum on items from Walmart.com, free delivery of groceries as soon as same day, and fuel savings, a slight drawback is that it has a $35 minimum order restriction (Repko, 2020)
The Amazon business model is based on an eCommerce market platform. Amazon allows for third-party sellers to sell to their consumers. According to Gary Fox, Amazons current targeted audience includes the following three: 1. Customers, 2. Sellers, and 3. Developers. The internet has played a huge part of Amazons Trillion-dollar corporation success (Fox, 2020). In comparison to what Walmart membership cost/provides, Amazon Prime membership costs $119 a year. Prime includes free shipping on every item and does not have a minimum for each order, and over 3 million products available for purchase, which has proven difficult to match. Amazon Prime has bought Whole Foods Market that can provide a 2-hour delivery in certain cities but does require a $35 minimum purchase. Amazon Prime also includes entertainment as well, such as ad-free music, video/tv/movie streaming, photos, gaming and prime reading services (Repko, 2020).
The Covid pandemic has created a different type of consumer. The consumer is different due to being forced into learning how to purchase items by a click of a button. Although Amazon continues to significantly lead the U.S. retail e-Commerce market in comparison to Walmart. Amazon also provides an entertainment factor and Walmart doesnt. There is a huge demand for convenience especially in a large family household. These large family households buy groceries on a weekly basis and when comparing to Amazon, most items on Amazon are not bought as often. The evaluation on both companies suggests that Walmart would be a better option to invest in. The new Membership+ program appears to be more promising for additional revenue.
Reference:
E. Black, K. Schoolov, K. (2020, August 13). What it would really take for Walmart to catch Amazon in e-commerce. CNBC. https://www.cnbc.com/video/2020/08/13/what-it-would-take-for-walmart-to-catch-amazon-in-e-commerce.htmlLinks to an external site.
Fox, G. (2020, February 9). Amazon Business Model: How Amazon Makes Money And More. GARY FOX. https://www.garyfox.co/amazon-business-model/Links to an external site.
Neff, Jack (2017, September 25). A PENNY SAVED; As many retailers hurtle toward disaster, Walmart seems to have corrected course. Instead of swerving between its base and more-affluent consumers–or between bricks and clicks–it’s investing in a balanced business model. (Just don’t call it ‘reinvention’) (Vol.88 Issue 18, 0077). Crain Communications, Inc.
Pereira, D. (2021, July 30). Walmart Business Model. Business Model Analyst. https://businessmodelanalyst.com/walmart-business-model/Links to an external site.
Repko, M. (2020, September 1). Walmart to launch its membership program, Walmart+, in mid-September. CNBC. https://www.cnbc.com/2020/09/01/walmart-to-launch-its-membership-program-walmart-in-mid-september.htmlLinks to an external site.
