Walmart vs Amazon, Round 2

In My Humble Opinion
21

IMHO, Walmart’s logistics are vastly over hyped.

I have routinely gone to Walmart to buy something to only be met by an empty spot on the shelf. Sometimes I’d go 4 visits or so and still see the empty spot.

Mrs. FtG is in love with their brand of triple-ply TP. Trying to find that in a store is a scavenger hunt. (And their web site often can’t tell if something is actually in stock at a given store.)

Don’t believe what you read about their hyper-modern supply chain. It’s mostly PR.

Amazon doesn’t have nearly the same problems on stocking routine items.

22

Oddly enough a stocker working at Walmart at 4am asked me what I was looking for and offered to go in the back to fetch it the other night. Then we had a good conversion. I’m also a fan of their White Cloud tp but it looks like they cut down on the selection with a 12 double roll being their smallest package at my local store. In general I would prefer to always shop Amazon but most of their grocery options are inconvenient or cost prohibitive at present.

23

That would be a local store issue. Sounds like the department manager and stockers in the store aren’t doing their job.

Walmart’s logistics, on the other hand, are pretty well renowned. Probably the current leaders in the country for JIT ordering. How many other retailers have a meteorology department so that they can optimize shipments of weather-sensitive products?

24

What’s the point of having world -class logistics if the system fails at the end? The customer doesn’t care if the product in in the receiving area or halfway around the world.

It’s not on the shelf.

25

But it happens at all the Walmarts near us. And there are several. (And no Targets. :()

It’s a classic example of corporate smugness. “We have the best system, Jerry, the best.” But no one is actually making sure it actually works.

26

Wal-Mart’s are embarrassingly bad up here in central Jersey. They’re all dirty, poorly stocked and terrible at check out.

I’m pretty sure that true in most of the North East. Ecomically they are probably behind Amazon and Target in the wealthiest part of the country. Probably not the best economic model.

27

I really dislike Wal-Mart.
Sometimes it’s a matter of convenience. If I need something now, not tomorrow or later, I can just run out to the store.

Amazon has the benefit of having a bigger inventory and you can find pretty much anything you want.

28

I think if Walmart does it properly, they could beat Amazon both online and offline. Walmart has warehouses and stores all over, Amazon is still building their distribution network. But it remains to be seen if Walmart can do online orders as well as Amazon.

I’ve been comparing prices and recently Walmart.com has had significantly better prices on a Dell laptop and a set of ink cartridges, and free shipping. There were a few rough edges on ordering from Walmart, it seems to default to in-store pickup and it takes some convincing to get them to ship the item to you. Also Walmart seemed to think the laptop would arrive on a Saturday, FedEx tracking disagreed and said 3-4 days later. Walmart turned out to be right for some reason.

29

Right off the bat looking around, they need a filter to not show Out of Stock. That is a ridiculously common filter they don’t seem to have.

30

The large stores and large number of employees is a reason Walmart is losing ground to the dollar stores (family dollar, dollar general, dollar tree). Those stores only need 1-3 employees at a time to run things, Walmart tends to have several dozen employees in store at any given time.

31

For consumer orders, Amazon’s logistics are significantly ahead of Walmart’s.

Walmart built systems optimized for a traditional retail environment:
Regional DC’s to support the flow of imported inventory
More DC’s to support stores
Focus more on cross-dock to get inventory to the stores (vs storage at DC’s)
Truck deliveries to stores
Manufacturer held inventory (to save DC costs) that can be part of pickup and delivery routes

These types of systems involve movement of inventory in relatively large quantities like cases and pallets. When I says systems, think conveyor and other types of expensive automation. All built for a specific model of operation.
Amazon, on the other hand, optimized for a consumer/online environment:
DC’s that store inventory (vs cross-dock)
Inventory storage that allows for piece picking (vs cases and pallets)
Piece picking and packing systems
Walmart’s (and anyone else’s) hardware and software in the DC to support distribution to the retail stores is about 75% useless when trying to efficiently pick and pack large volumes of consumer orders.

To support large volumes of consumer orders, especially when you have a large sku count (e.g. millions) with possibly low units per sku per day (e.g. only one of sku X shipped today), you have to solve some tricky problems.
1 - Picking
Naively picking order by order would be incredibly inefficient and would cause the picker to have to walk all over the DC many times.

The typical solution is some sort of batched picking (group parts of orders together) with a sort operation (marry up the pieces for each order into it’s own container). There are multiple options, but, for high volume, they involve expensive equipment and software geared towards that specific problem.

2 - Packing
To ship to consumer, each individual order needs to be placed in an individual shipping carton with a shipping label (e.g. UPS, FedEx).

This operation is an order of magnitude more labor intensive than just taking a case from receiving or from reserve and shipping it back out to the store.

There is some automation that can be used here, like auto-baggers, but that doesn’t work for everything.
Amazon has multiple levels of traditional optimization related to the picking problem (batched picking, sorters, putwalls, etc.) in use at their DC’s which the robots are slowly replacing. The robots basically bring the inventory to the packers.
From a consumer distribution standpoint, Walmart is retooling to solve this new type of problem. Last I saw they were projected to have about 8 e-commerce fulfillment centers by end of 2017. Compare that to over 100 for Amazon in the US (plus maybe 50 in rest of world).

32

Exactly. In every other case I can think of where a brick and mortar incumbent has gone up against an online company, the physical retail locations have proved to be an albatross.

Imagine writing the Blockbuster vs Netflix comparison a decade ago and listing all of Blockbuster’s locations as a positive for Blockbuster.

That said, Walmart’s online store is not bad, and they also own Jet.com I regularly buy stuff from both. But probably only about 1/4 as much as I buy from Amazon.