Amazon, Walmart Vie For Consumer Loyalty Amid Supply Chain Pain

Amazon, Walmart Aim to Maintain Consumer Loyalty

While the ongoing race for the consumer’s whole paycheck is always fairly fast-paced, the past few weeks have redefined the meaning of that term. Supply chains have been pushed to the limits by a pandemic that’s been the equivalent of a Category 5 hurricane hitting every part of the U.S. economy every day for the past 44 days and counting.

While efforts at reopening the U.S. economy are underway in some states, even the earliest actors – places like Florida, Georgia and South Carolina – are taking a phased approach. Stores won’t open all at once, and social distancing guidelines will remain.

Reopening the economy will by all accounts be a slow, staged affair, meaning the emotionally fraught tenor of the past several weeks will likely morph into an unusual dynamic that businesses and customers will have to navigate for some time. It’s just the latest hurdle that’s sprouted up for both companies on the racetrack to win your whole paycheck.

But then again, as the week’s tally indicates, both companies have gained some skill in clearing those.


Big News Of The Week: Hard Times Haven’t Hit Customer Loyalty

Amazon’s early difficulties in adjusting to COVID-wary customers’ heavy online ordering have been well-documented, as have consumer frustrations with things like delivery delays and stock outages. But according to recently released data, those issues don’t seem to have done much to dent enthusiasm for the nation’s largest eCommerce retailer.

Comscore recently reported that Amazon’s site saw 2.54 billion visitors in March – a 65 percent jump from the same time last year. The pandemic also pushed Amazon Prime memberships up by 10 percent year over year for the weeks of March 16 and March 23, according to research firm Second Measure.

Those figures dovetail with data from Consumer Intelligence Research Partners (CIRP), which found that conversion rates from free Amazon Prime trials into paid Prime memberships hit a two-year high during the first quarter. “Prime members do get the quickest shipping … and in times when consumers are concerned about getting the supplies they need, knowing that their order is going through the most efficient shipping channel is probably appealing,” said CIRP’s Josh Lowitz.

Such Amazon enthusiasm doesn’t seem to be a transient effect of consumers’ reaction to the COVID-19 pandemic. A recent Recode survey found that while consumers did report frustrations with Amazon and Prime membership of late, the vast majority plan to keep their Prime memberships beyond the pandemic period. They continue to believe that Amazon remains their best option for consistent delivery.

“Nothing beats Amazon’s range of products and quick delivery,” Sarah Durham, a 41-year-old Prime member from Plano, Texas, told Recode.

Enforcement Action Of The Week: The Ongoing Counterfeit Clean-Up In The Digital Aisles 

In its latest efforts to battle back fraud during the COVID-19 pandemic, Amazon is using video conference calls as part of its onboarding process for new merchants. According to reports, the company is trying out video systems as an alternative to the in-person meetings that were originally used to verify identity before COVID-19.

The technology was already under development pre-pandemic as part of Amazon’s wider efforts to purge counterfeit goods from their platform. However, the pace of those efforts picked up in COVID-19’s wake, particularly in regard to counterfeit and unproven products that claim to detect, treat or cure the disease.

“We’re vigorously combating price gouging to help protect customers, help ensure fair pricing and combat those seeking to profit off the COVID-19 crisis,” Amazon said in a statement.

But while Amazon is publicly working to bolster its anti-fraud/anti-counterfeit measures, the company is also facing very public accusations that those efforts are insufficient. The latest Notorious Markets report by the Office of the U.S. Trade Representative named marketplaces on multiple Amazon international websites as having issues with piracy and illegitimate goods.

The report took issue with some Amazon eCommerce sites in the United Kingdom, Canada, India, France and Germany. The USTR claims it’s too easy for any seller to open up shop on Amazon, and says that seller information shown by the eCommerce platform is often misleading.

However, Amazon denounced the report to Reuters as a “purely political act” in which President Donald Trump – long a foe of Founder Jeff Bezos – was “using the U.S. government to advance a personal vendetta.”


Big News Of The Week: Staying Ahead Of The Supply Chain Pain 

The fact that the last several weeks have hit Walmart’s supply chain hard is far from a secret. CEO Doug McMillon acknowledged the challenges in his late April letter to investors, though he noted that thus far, the company has been able to overcome them.

“Our supply chain has been stretched, but together with our suppliers, we’ve kept the supply lines open so people can get what they want and need and at a great value,” McMillon wrote.

The challenge, a Walmart supply chain manager told The Verge, is that the artificial intelligence (AI) and modeling tools that Walmart generally uses to govern its supply chain are built off of historical data. But there’s no historical data for COVID-19 because the situation is unprecedented, which has made the AI a bit more indecisive.

“It’s become more dynamic, and the frequency we’re looking at it has increased,” the manager noted, speaking on condition of anonymity because he wasn’t authorized to comment publicly. In other words, Walmart’s supply chain managers are interacting with the AI, but manually configuring things more often.

The AI system is learning quickly, but the times are challenging, even if the CEO remains upbeat. “We’re making important short-term decisions that protect us now and set us up for the future,” McMillon wrote.

What will that future look like, exactly, and when it will begin?

Those questions remain open for both Amazon and Walmart as they carry on a race for the consumer’s whole paycheck in an environment where paychecks have become far less certain for a large swath of consumers.

Both companies seem committed to rising to the moment, and are enjoying some success in capturing consumer loyalty along with customer spend.

How will that play out as the early days of the Great Reopening commence? We’ll keep you posted in this column.