e-tailing Update: Lessons from the newsboy

While this represents my third “official” e-tailing update about the evolution of e-commerce, it is my sixth Insights column on the topic. The series has chronicled the evolution of e-commerce using Walmart versus Amazon as a reflection of what has been going on in the battle between retailers and e-tailers.

Review of prior e-tailing columns the first column was written in 2013 (1) and discussed how Amazon had become the “on-line fulfillment champ” because it successfully innovated warehousing to do large-scale unit-pick, unit-pack and unitshipping to support parcel home delivery of on-line orders. The next (2) was about the 2015 Christmas e-commerce mishaps that caused many presents to (embarrassingly) not be delivered on-time to be put under the Christmas trees. The third (3) discussed the need for retailers to do a better job of e-commerce innovation. While they were leveraging and retrofitting legacy brick-and mortar processes and infrastructure, they were struggling to compete against Amazon’s (built from scratch) on-line e-commerce operations; as well as its distributed order management (DOM) capabilities.

In 2016 (4) I discussed three basic ways retailers can get goods to consumers: 1) shelf sales; 2) online ordering with home delivery; and 3) online ordering with pickup. The first is Walmart’s forte; as it has the most efficient retail supply chain ever. It is based on a capital- intensive infrastructure for pallet-based picking, packing and shipping. Amazon would have to go through great expense to effectively compete against that model.

However, on-line ordering with home delivery—the second approach—is Amazon’s forte and Walmart continues to be challenged to compete effectively. The third way, involving in-store pick-up, plays to Walmart’s strengths; Amazon will be challenged to effectively compete against its chain of stores.

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