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Beating the Behemoths – Amazon.com and Walmart

In this Insight Flash, we use CE Vision to:
  • Evaluate competitors’ market positioning on a demographic and geographic basis
  • Track how that positioning is evolving over time and in response to events like the COVID-19 pandemic and states reopening
  • Benchmark return customer behavior vs. competitors and see how new shoppers are behaving differently than more established groups

Since the COVID-19 pandemic began, retailers have been grappling with the changing competitive landscape as new rivals emerge from surprising corners.  However, whether pre-coronavirus, during the height of the COVID-19 pandemic, or as we return to the “new normal,” two names have consistently been among the fiercest opponents (though also sometimes partners) no matter what the market conditions:  Amazon.com and Walmart.  While the dominance of these two players in terms of sales is well-established, our CE Vision dashboard suite allows for deeper dives into what is driving their success and where competitors will have to fight the hardest when it comes to demographics, customer geography, and repeat shopping behavior.  The reduced latency of this data, updating every week and presenting trends with only a week lag, allows for not only longer-term fundamental exploration of these drivers, but also more time-sensitive analysis of how they have changed under shifting coronavirus conditions.  This report finds that spend growth in recent months has come from evolving demographic and geographic sources, meaning that retailers will have to fight to retain different customer segments, while “loyalty” among new shoppers has increased in the presence of limited alternative options, meaning that these fights may become harder as well.  These patterns may be disrupted with the launch of Walmart’s e-commerce subscription service Walmart+, so companies should closely follow the data in the weeks ahead to adapt their strategies accordingly.

From a demographic perspective, Amazon.com and Walmart have carved out very clear market positionings that seem to imply room for both companies to succeed.  Amazon’s spend share in 2019 was more heavily weighted than Walmart’s toward younger shoppers aged 25-44 and toward higher income shoppers making over $100,000 per year.  In fact, each of these groups represented about half of total spend for Amazon in 2019.  In contrast, Walmart had a higher spend share from older shoppers aged 55+ and lower income consumers making under $60,000 per year.  While Walmart’s income concentration level was similar to Amazon’s (though at the other end of the spectrum) and the two lowest income buckets made up over 50% of Walmart spend in 2019, the distribution of spend among age groups was more evenly distributed for Walmart than for Amazon.com. 

Interestingly, COVID-19 has led to growth in unlikely places for both companies.  Looking at the average y/y spend growth for each demographic bucket in the last three months, Walmart has actually seen its highest spend increase among younger shoppers, while Amazon’s strongest growth is coming from the lower income groups.  In general, our data has shown a spike in low income spending due to stimulus checks and increased unemployment payouts, and although Amazon appears to be benefitting from this increase, the spend growth represents a much more disproportionate share of Walmart’s recent growth.  This may reverse growth trends for Walmart if another stimulus fails to materialize as tax payments finally come due and unemployment benefits normalize.  To compete against both of these companies, it will be important to keep track of where they are entrenched but also where they are growing.

Demo Over Time:
Age 2019 Share of Spend Chart
Age 2020 April to June Change in Spend Chart
Income 2019 Share of Spend Chart
Income 2020 April to June Change in Spend Chart

Note: 2019 spend share is the total spend for each demographic group over the total spend for all known demographics; 2020 Apr – Jun Change in Spend is the average of the y/y sales growth in each demographic bucket for those three months.

On a geographic basis, state-level trends have become increasingly more relevant due to business closures, openings, and re-closings all happening on the state level.  Consumer Edge offers several different state-level data cuts, including spend at each retailer by cardholder state.  For Amazon, the e-commerce tailwind from physical store closures is very clear, with California and New York, among the latest states to reopen, showing the strongest growth among four tracked states in cardholder spend in the past three months (a divergence from similar growth rates across tracked states throughout 2019).  For Walmart, strong spend growth came from shoppers living in every tracked state but New York as customers stocked up on grocery essentials.  However, that growth slowed dramatically in Georgia and Texas as those states reopened, while spend growth among New Yorkers has accelerated.  These geographic divergences are important for Amazon and Walmart competitors to keep track of as they think about their own reopening and customer acquisition strategies on a market-by-market basis.

Geo Over Time:
Amazon.com Monthly Spend Growth by Cardholder State Chart
Walmart Monthly Spend Growth by Cardholder State Chart

Finally, the new first shopped dashboard allows users to see how new customers behave in subsequent months and how successful retailers are at bringing those new customers back.  While extremely useful in evaluating each company’s own shopper base, this information is also key for benchmarking competitors and their ability to drive repeat business.  Amazon in general has a much larger percentage of individuals than Walmart who return in the months after their first purchase.  In June 2020, over 25% of those who first shopped at Amazon in January 2020 returned for additional purchases, versus only 10% of Walmart shoppers who first shopped the brand in January returning.  For both companies, new shoppers who likely turned to the brands to fill coronavirus-related needs appear to be initially more loyal than those who began shopping the brands in the beginning of the year.  New shoppers in March-May of 2020 were more likely to also make a purchase one month later than shoppers who made their first purchase in January or February.  This higher return rate creates a larger barrier for competitors hoping to gain (or even maintain) share from these behemoths.

First Shopped Cohorts:
Amazon.com Repeat Behavior by First Shopped Month Chart
Walmart Repeat Behavior by First Shopped Month Chart
Note: Among those who first shopped in month specified in legend, what % came back x months later as specified on x-axis; “first shopped” is only counted as first time shopped in published data history.