While both Amazon and Walmart tout an obsession with consumer experiences, this week the race for the customer’s whole paycheck saw the light shining on managers at Walmart and sellers on Amazon – and the six-figure opportunities available to both.
Expansion was also on order this week, as were some course corrections. Walmart is literally going to the dogs (and cats, fish, birds and hamsters) and rethinking its tobacco policies. Amazon, on the other hand, is getting very serious – very fast – about growing one-day shipping in the U.S. for Prime members, and rethinking just how cashless Amazon Go stores really need to be.
So who got ahead in the race this week?
Amazon
Big Play of the Week: One-Day Prime Shipping Is (Mostly) Already Here
When Amazon announced its intention to hit reset on Prime two-day shipping and turn it into Prime one-day shipping last month, and its aim to spend $800 million on the project during Q2, it was clear the intention was to get moving quickly on the project.
A new report has revealed that Amazon can offer same-day and next-day delivery to 72 percent of the U.S. population, including almost all of the households (95 percent or more) in 16 of the wealthiest and most populated states as well as Washington, D.C.
As Amazon Chief Financial Officer Brian Olsavsky acknowledged in a call with investors last month, the effort to increase shipping times has been underway for some time, and the latest Prime update is the natural evolution of the program.
“We have been offering, obviously, faster than two-day shipping for Prime members for years (one-day, same-day, even down to two-hour delivery for Prime Now), so we’re going to continue to offer same-day and Prime Now, morphing into – or evolving into – a free one-day offer,” he said in response to an analyst question.
Olsavsky also revealed that Amazon has already begun to see “good order trends” after launching one-day default shipping in select locations.
Pivot of the Week: Amazon Says Yes to Cash at Go Stores
Though originally rolled out as a totally unmanned and cashless approach to retail, it seems at least some Amazon Go locations will now allow cash payments.
Steve Kessel, a senior vice president who helms the physical store operations for Amazon, confirmed an expansion in payment methods at Go stores in a recent internal meeting, but offered no timeline for the change.
“We’re in earlier days, but it’s an important focus for us, and we’ll continue to extend those methods with our stores,” Kessel said at the meeting, as noted in a recording heard by CNBC.
Among other payment methods added across Amazon was a pilot that accepts government benefits tied to the Supplemental Nutrition Assistance Program (SNAP). Amazon reportedly has plans to open 3,000 more Go locations by 2021.
In terms of mechanics, an unnamed spokesperson told CNBC that customers will “check out, pay with cash and then get change,” and that “we are working to accept cash” at the stores.
The apparent shift in payments policy comes amid criticism against cashless businesses, which contends such retail offerings discriminate against unbanked consumers. Philadelphia was the first city to ban cashless shops, and New Jersey and San Francisco have followed suit.
Opportunities for Enrichment: The Lucrative Life of Amazon Partner Businesses
In honor of small business week this week, Amazon released data that claims it has helped 1.9 million small and medium-sized businesses (SBMs) in the U.S. to take in more than $160 billion in revenue in the last year.
“As we work to help them grow their businesses, we are making big investments in our delivery network, data centers, AI research (and) robotics,” noted Amazon Worldwide Consumer Division CEO Jeff Wilke.
Among SMBs listed as aided by Amazon are authors who self-publish through the retailer’s eBooks unit, developers building skills for Alexa and, of course, merchants selling in its eCommerce marketplace.
Small to medium-size businesses (SMBs) drive the sales of more than half of all units sold on Amazon. In early May, the company also announced it has rolled out 50 new services and tools since the beginning of the year, and that it “spends billions” to assist SMBs in selling more online and growing their operations.
Walmart
Big Play of the Week: Moving on the Pet Owners
Pet lovers spend billions a year on their fur babies, and Walmart is actively going after that spend with the addition of an online pet pharmacy. The company will also open additional veterinary clinics in conjunction with the digital pharmacy launch. The retailer plans to bring its number of clinics to 100 from the current 21 in operation.
Walmart has increased the number of cat and dog healthcare products by approximately 60 percent during the past year, one of many moves in the increasingly competitive pet space. Amazon recently released its own pet food brand, while Target has teamed with BarkBox to offer chew toys and treats online and in-store.
According to one estimate, the average pet owner spends a little more than $2,000 per year caring for their animals, and Americans reportedly spent approximately $69.5 billion on pet care collectively in 2017.
Pivot of the Week: Walmart Resets Its Tobacco Sale Policy
Though Walmart’s moves are mostly focused on generating more sales, this week’s quest for the whole consumer paycheck actually entails passing on some spend. Going forward, the retailer will not sell tobacco products to consumers under the age of 21. The company will also stop selling sweet-flavored eCigarettes, which have recently become epidemically popular with teenagers.
The policy shift comes after Walmart (WMT) received a letter from the U.S. Food and Drug Administration (FDA) for not fully prohibiting kids under 18 from buying tobacco products at its stores. Walmart was the subject of about 13,000 compliance checks since 2010, of which the retailer passed only 93 percent, according to the FDA.
“While we have implemented a robust compliance program, we are not satisfied with falling short of our company-wide goal of 100 percent compliance,” the company wrote. “Even a single sale to a minor is one too many, and we take seriously our responsibilities in this regard.”
The new policy will go into effect on July 1.
The FDA stipulates that tobacco and eCigarettes may only be sold to people 18 years or older. But several states have raised the age for legal sales to 21, including Illinois, Washington, Hawaii and California.
Some spend, as it turns out, isn’t worth capturing – and spend on tobacco addiction for minors is, for Walmart, officially on the list.
And as for the rest of customers’ spend, they would be fine with collecting it.
But then again, so would Amazon.
Opportunities for Enrichment: The Lucrative Life of a Walmart Manager
This week, it came out that despite a long reputation for underpaying workers, Walmart managers are making very reasonable salaries. According to a company release, store managers earn an average of $175,000 a year – about four times the roughly $47,000 an average American worker makes per year, according to the Bureau of Labor Statistics.
Full-time workers at Walmart start at $14.26 per hour, or a little under $30,000 a year, which is nearly double the federal hourly minimum wage of $7.25. A little over half of Walmart’s workers are full-time; part-time workers make less per hour. The lowest starting wage for any worker at Walmart, full-time or part-time, is $11 an hour, according to the company. The retailer has been making a concerted effort to boost wages since 2015, when it formally announced a plan to invest $2.7 billion over two years to increase worker pay, as well as to offer more training and education for workers.
In January, Walmart announced plans to increase the annual salary for 8,000 truck drivers to an average of $87,500 year.
“We want to build a skills-based employment system, with ladders of opportunity, at scale,” Kathleen McLaughlin, chief sustainability officer at Walmart, said in a report.
The company further noted it promoted 215,000 people, or about one-fifth of its U.S. workforce, to roles with greater responsibility and higher pay in the past year.
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