As this goes to press (so to speak), the annual NCAA March Madness tournament is rounding off the Sweet-16 round. There’s been plenty to watch as the tournament is hitting the halfway mark. UVA fans have been relieved to see their top seeded team not drop to a 16-seed in the first round of the tournament. Duke fans were shocked to learn that Beyoncé is a critical part of Coach K’s team management program. Yes, Mike Krzyzewski, Duke’s legendary tactician of a basketball coach for the last 40 years, is also a huge and vocally enthusiastic member of the Beyhive.
“He loves Beyoncé, he loves Beyoncé. He, like, loves Beyoncé,” former Duke star Quinn Cook said earlier this week on a podcast before relating that the coach would make the players watch Beyonce training videos to motivate them.
It remains to be seen if they Duke squad will be able to get in formation later today to advance to the Elite 8 — or if they will really try to match Beyoncé’s athleticism by playing the entire game in high heels.
The race to be the best team in college basketball is fairly short and compressed — and will be over in about a week.
The race to control the consumer’s whole paycheck, on the other hand, is always ongoing, seven days a week, 365 days a year. And, given the actions of the two top “teams” in the league — Amazon and Walmart — one might conclude that the championship is happening weekly.
And, as always, we’ve tracked the more winning efforts.
Play of the Week: Amazon’s Staggering Scale
That Amazon, by the numbers, is a massive force in retail and consumer spending is not much of a news item. But just how much might be. It has a 6.3 percent lock on the total of U.S. retail spending (and growing) and its ongoing war with Walmart for ever greater levels of control are the reason this entire tracker exists.
But new reporting out in Bloomberg this week refreshes the Amazon numbers — and gives a peek into just how extremely large Amazon really is. The report notes that in 2018 Amazon brought in $25.6 billion from AWW, over $234 billion in eCommerce sales and $7.4 billion in advertising revenue. It is behind 88 percent of eBooks sold, 83 percent of the eReader market, 42 percent of the market for analog books and 7.5 percent of the consumer electronics market. Amazon’s apparel and grocery efforts both bring in about $25 billion a year and about 200 million people visit the site monthly, half of them Prime members.
They are impressive numbers, and some in fact say too impressive; as the report noted, presidential hopefuls like Elizabeth Warren have repeatedly singled out Amazon as a prime candidate for trust busting, given its staggering size and success. However, as many have pointed out, based on the current interpretation of U.S. antitrust law — which focuses on harm to consumers via predatory pricing — there’s little to suggest that anything about Amazon is illegal since they’ve long since hewed toward offering customers greater selection at lower prices. And customers aren’t complaining.
Amazon has also in the past responded that its broad reach is not on its own an indication of market power since in every market it enters it finds entrenched competitors, some of whom compete quite successfully. Not every market it enters, after all, is a resounding success. The Fire phone, the expansion into travel and foray into online auctions were all Amazon experiments that didn’t go as planned — and even Amazon Restaurants has failed to gain traction in the massive market for food delivery.
Whether any of those factors will deter regulators like Senator Warren, however, remains to be seen. But as Bloomberg notes, Amazon can also always point to its main competitor in the whole paycheck race, and note that it is not alone when it comes to massive size and scale. Amazon has noted that Walmart, the biggest retailer in the U.S. by sales, dwarfs it in scale and geographic reach. Walmart has 4,750 brick-and-mortar stores. Amazon-owned Whole Foods and the cashierless Amazon Go convenience stores together add up to just 487 locations.
Of course, there is no such thing as Walmart Web Services, though …
Playing for Gamers (and Their Parents) With a New Prime Perk
Gamer perks on Amazon Prime are not a new thing — the “Twitch Prime” subscription bonus has long been a popular favorite.
But Amazon has leveled up its Prime bonuses for gamers in its first ever partnership with a console maker this week. Prime members with a Nintendo Switch can now claim a combined 12 months of free Nintendo Switch Online access (a $20 USD value) through a Twitch Prime perks page.
Those who have already paid their subscription fee can still use the bonus, by logging in and adding the promo, and the new free months are simply stacked on top of time already paid for.
To block cheaters — those who would sign up for a one-month membership to collect the bonus and scuttle off — the program only allows users to load the first three months of free time; only after that window has passed will Amazon load up the remaining nine months. The three-month offer expires September 24 of this year, while the additional nine-month offer must be claimed by Jan. 22, 2020.
The move also acts as a nice perk for one of Amazon’s key demographic — bridge millennial parents of young children. The Nintendo Switch is far and away the most popular gaming console among that demographic set. You can’t capture a whole paycheck without hitting the whole range of a family’s needs, after all, and increasingly video game systems make that checklist.
Play of the Week: Some Help From the Famous and Stylish
While historically not associated with the term “high style” in the past, Walmart in the last several years has been looking to up the ante in its merchandising game.
The latest steps forward this week included signing an exclusive deal with actress Drew Barrymore to bring a new collection of boho-chic furnishings, home decor and dinnerware on the company’s Walmart.com and Jet.com sites.
The 200-plus items are described as “boho-chic” and include a wicker cat bed with pointy ears for $74, a framed painting of a “human dog” in a tuxedo for $59, a “hand woven macrame” basket set for $70, and an $899 velvet pink Parisian sofa.
The embrace of hipper home decor in store comes along with an expansion into higher fashion online. Care of its online sales partnership with Lord & Taylor signed last year, recent reports indicate that as of now designer label oriented consumers can find BCBG. Walmart.com carries both BCBGMAXAZRIA and its lower-priced more youthfully focused BCBGeneration.
Both, reportedly, have some difficulty staying in stock on Walmart.com, as they sell out quickly.
Embracing the Supercenter Opportunity
While some have bemoaned Walmart’s extensive physical footprint as overdeveloped and out-of-date in the era of digital retail, Walmart does not agree. Brett Biggs, chief financial officer at Walmart, told investors at a meeting this week that the Supercenter is an omnichannel opportunity and no longer a disadvantage for the retail giant.
“The amount of change in recent years has been huge,” Biggs said with regard to the company’s investments in omnichannel. “This is a sharp contrast to the Walmart of 15 years ago when the central focus was putting more Supercenters in the ground. … In retrospect, this made us slower than we would have liked to get to the omnichannel customer.”
But these days, a few years into its great digital expansion, Biggs says, Walmart is starting to really see the investments pay out.
“We began to see the hard work of building 5,000 stores was already done, so we started investing in the technology capabilities of online pickup. The results have been huge because our customers love it,” he said.
Biggs noted that the average Supercenter carries 120,000 items and can offer same-day pickup for consumers. Meanwhile, he noted, 90 percent of the U.S. population is within 10 minutes of a Walmart — a fulfillment infrastructure about as close to the end user as humanly imaginable. Online grocery pickup has been a massive boon that has been critical in growing total eCommerce sales by a clip of roughly 40 percent this year. Online grocery shoppers also tend to spend nearly two times more than traditional store shoppers.
By the end of 2019, Biggs said Walmart will offer online grocery pickup in 3,000 stores, and the retailer will continue to add more general merchandise to its online grocery app to grow the basket margins.
So what is the week’s lesson, other than if Duke wins the championship, their coach will likely celebrate with a massive Beyonce dance party?
That the story, when it comes to taking on the consumer paycheck for Amazon and Walmart, is always going to be about more. Offering more, layering more services on and finding more inroads into the consumer’s wallet.
We’ll keep you updated on which one manages to sink more baskets.