It is the classic face-off between the king of bricks-and-mortar and the ruler of the e-commerce world. Wal-Mart (WMT) is about to up its bet on consumer electronics, a highly profitable and growing part of Amazon’s (AMZN) business.
At stake is whether physical stores can take back business from e-commerce sites which have been besting them at sales growth rates for nearly a decade.
According to The Wall Street Journal, “Wal-Mart Stores Inc. (WMT) is revamping the electronics departments in its more than 3,500 U.S. stores this week, ramping up an aggressive battle with Best Buy Co. (BBY) and Amazon.com”
Taking market share from Best Buy will only prove that Wal-Mart can still use its large numbers of stores and customers and its ability to sell merchandise at low margins in bulk to take business from a smaller bricks-and-mortar continues to be a success. Amazon is another matter.
Amazon holds several advantages that will make Wal-Mart’s task hard, if not impossible. The first is a nearly infinite selection of consumer electronics that come in every size, color, and configuration. Amazon also allows people to comparison shop effortlessly and stay out of crowded stores. Its shipping practices often allow people to get products sent to their homes at no cost.
If Amazon has proven one thing over the years it is that it can grow faster than almost any retailer that relies on physical locations. There is absolutely no reason to think that will change.
Douglas A. McIntyre
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