There’s a good reason for Wal-Mart Stores, Inc. (NYSE:WMT) and Amazon.com, Inc. (NASDAQ:AMZN) to come together. It would result in mutual financial benefit as well as global domination. Walmart has recently posted decent sales figures. It’s investing heavily in ecommerce and promoting Walmart Labs.
Amazon is planning to open brick-and-motor outlets and is promoting drone delivery. The company now enjoys the status of being the world’s leading retailer.
Just a few years ago, Walmart needed the merger less than Amazon. However, the things have changed. Walmart should partner with Amazon at the earliest.
It must be recognized that past retail policy will in no way influence future retail policy. Walmart has reacted very late to the online nature of the market.
Spending a large amount of money on ecommerce or a better website with superior user experiences is addressing only part of the problem. The challenge is to change a highly successful resistant to change retail culture. This is a classic category where existing revenue models make companies blind to future revenue models that would destroy the old ones.
Amazon is well positioned to leverage the online retail revolution. Walmart is trying to catch up. However, its attempt may be futile. It made sense for Walmart to acquire Amazon years ago. That time the offer would have held a certain amount of attraction for Amazon. Currently, Walmart has to market itself to the world’s biggest retailer.
Another reason for a merger is the differing customer profiles of Amazon and Walmart. Lower income shoppers make up the majority of Walmart’s customers. Higher income customers prefer Amazon. Without a merger, Walmart is vulnerable to the global economy and lower-income purchasers affected by the trends in wage inequality.
AS per data, there will be vast generation differences in retail behavior. People from most generations will comprehend less and less the experience of what the browsing in stores is.
Walmart has over 10,000 storefronts and can implement its buy online and pick up stores tactics that could prove advantageous to Amazon.
Both companies stand to gain a great deal from a merger. However, with the passage of time the terms will be different. A few years down the line Amazon may be courting other partners.
Sources: forbes.com
