Stock of the Week: Walmart

If the rumours of an attack on Amazon are true, this revengeful retailer would do the most damage

Andrew Willis 17 August, 2020 | 1:39AM

 

 

Throughout the pandemic, we’ve seen Walmart (WMT) hustle. It was appreciated by consumers, but was it worth it for employees, or the company? Not yet. We’ll know more with second-quarter earnings and perhaps more importantly when we find out if all the rumours are true…

Rumours around an effort aimed at Amazon Prime (AMZN) directly, in retaliation for years of diverted sales – especially as many shoppers went online throughout the pandemic. That’s not to say that Walmart wasn’t around online, but they had a digital presence seemingly tacked-on to an old in-store business model.  

This time, we’re hearing they’re back with an offering that could be a game-changer and a different shopping experience from the ground up. You’d be a member now -  a Walmart “+” member with fast and free shipping, grocery delivery, fuel discounts and even – perhaps controversially – Walmart entertainment offerings, all at a lower price than Prime.

Which brings us to our biggest question: If Walmart hopes to replace Amazon, do we as consumers even want this to happen? Equity Analyst Zain Akbari says that Amazon has had such a massive headstart – 15 years now – on an “Amazon-like” business that they’re already entrenched. We don’t think customers are going to want more than one such subscription- so does Walmart+ have the switching power? The service does pair nicely with the company’s extensive physical locations for grocery pickup and their well-established product procurement network for good prices.

We’ve seen epic battles between titans of the tech world when strengths are moulded into competitive products. But digital market share is very hard to steal, as we learned when Google’s “+” took on Facebook... But what happens when the threat comes from a giant of the real world?

For Morningstar, I’m Andrew Willis.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Amazon.com Inc3,231.47 USD0.76
Apple Inc117.31 USD1.15
Netflix Inc529.07 USD-0.31
Walmart Inc144.80 USD1.29

About Author

Andrew Willis

Andrew Willis  is Content Editor for Morningstar.ca

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