AMZN vs WMT Weekly: Dialing up the Digital, Working on the Warehouses

It seems too good to be true. A virtual customer walks into a virtual store and purchases a virtual sweater with some virtual currency. The only thing missing from this digital dream, it would appear, are virtual profits, as in, how do you actually make money on this virtual side hustle when you also have over 10,000 very real physical stores scattered all over the world that need more than a little tending to?

Pesky little details like profits, you might say, are not part of the purview of the visionaries who dwell in the future, and for us mere mortals who, on a brisk January day, simply want to pay cash or credit for a sweater that fits in a color of our choosing, this whole metaverse moment is virtually impossible to comprehend.

Nevertheless, the middle-aged mammoth that grew famous as being the “low price leader” sees a party and, understandably, wants to be a part of it. In this case, Walmart’s futuristic FOMO came in the form of reports that it had filed for more than a half dozen trademark and patents to protect its intellectual property in the metaverse, the cryptocurrency world, and the equally ambiguous but oh-so-trendy category known as NFTs.

According to the filings, the world’s largest retailer is looking to create “financial services, namely, providing a virtual currency for use by members of an online community via a global computer network,” that would facilitate aforementioned virtual sweater purchase with “virtual currency, in the field of nonfungible tokens (NFTs).” The move comes three months after the Arkansas-based retailer rolled out a 200-location pilot of bitcoin-enabled ATMs that it is now planning to scale into the thousands.

If all of this trendy, other worldliness seems rather un-Walmart-like, you’re right. In fact, the final point in “Sam’s Rules for Building a Business” that are attributed to the late founder Sam Walton at the Walmart Museum includes this advice: “Swim upstream. Go the other way. Ignore the conventional wisdom. If everybody else is doing it one way, there’s a good chance you can find your niche by going in exactly the opposite direction.”

Amazon Style

Somehow, Walmart’s futuristic endeavors in the metaverse have managed to make its digitally dominant rival’s latest undertaking seem downright ordinary and useful. This, as the Seattle based eCommerce giant unveiled Amazon Style to the world this week, in what it is calling its “first-ever physical apparel store [that] offers a personalized, convenient shopping experience where Amazon’s technology and operations make it easy for customers to find styles they love at great prices.”

Given that most consumers already shop with a mobile device in hand, Amazon’s new hybrid solution is not that much of a stretch and is truly a combination of physical and digital retailing. In it, a browsing customer can check pricing, sizing and inventory status in real time, and then with the swipe of a finger, can have those items picked from a warehouse and whisked to a pre-assigned digital dressing room, where they can be tried on the old-fashioned way.

What’s even more interesting about this new format is the algorithmically driven cross-selling opportunity that goes with it. While the digital world has long made “customers also like” suggestions to online shoppers, Amazon Style takes those to the next level and actually stocks your “fitting room closet” with a few extra items it thinks you might like alongside the pants and sweater you selected yourself to try on.

“Our physical retail team built several new technologies that work together to make it effortless for customers to discover items they’ll look and feel great in,” Simoina Vasen, managing director of Amazon Style, said in a blog that noted the first store would open soon in southern California.

Meanwhile, Back on Earth

It’s not all out there and futuristic for the two titans of retail, as both also are busy refining and retooling their massive warehouses and fulfillment centers to bring further automation and efficiency to the unsung brick-and-mortar heroes of the supply chain war.

For Amazon, that next-gen “FC of the future,” code named “Project Tiger,” is currently taking shape inside a 165,000-square-foot building 10 miles outside of Seattle and is reportedly set to begin operations by the end of January after over a year of planning.

For its part, Walmart announced plans of its own this week to address its own changing logistical and omnichannel needs.  This, amid news that Casey Carl, the company’s chief omni strategy and eCommerce officer, is stepping down 16 months after arriving from Target, as well as the unveiling of plans to build a new million-square-foot fulfillment center in Mississippi.

“Unlike distribution centers, which are focused on receiving, storing and distributing product to Walmart stores, fulfillment centers are focused on storing millions of items that are picked, packed and shipped directly to customers as soon as next-day” the company’s announcement said, noting that its U.S. eCommerce sales grew 8% in the third quarter and 87% over the past two years.

And there’s nothing virtual about that.