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Earlier this spring, Amazon<\/strong> and Walmart<\/strong> released investor updates within one day of each other that presented an interesting juxtaposition of how the two companies approach innovation: The long and short of it is that Amazon is a \u201cWhy\u201d company, while Walmart is an \u201cAnd\u201d company<\/strong>.<\/p>\n Walmart CEO Doug McMillon in an April 9 <\/strong>update<\/strong> following the company\u2019s investment community meeting: \u201cWe\u2019re an \u2018and\u2019 company. We\u2019re people and tech; stores and ecommerce; innovation and execution.\u201d<\/p>\n Amazon CEO Andy Jassy in an April 10 <\/strong>letter<\/strong> to shareholders: \u201cAmazon is a \u2018why\u2019 company. We ask why, and why not, constantly. It helps us deconstruct problems, get to root causes, understand blockers and unlock doors that might have previously seemed impenetrable. Amazon has an unusually high quotient of this WhyQ (let\u2019s call it \u201cYQ\u201d), and it frames the way we think about everything that we do.\u201d<\/p>\n The saga of Amazon and Walmart is more of a Godzilla v. King Kong tale than a David and Goliath story (although that certainly wasn\u2019t the case 30<\/strong> years ago when Amazon debuted as an online bookstore). And while Walmart still holds the crown as the world\u2019s largest retailer in terms of revenue, over the last three<\/strong> decades Amazon has given Walmart a real run for its money, and as a result, prompted a notable series of innovations at the older company (Walmart Marketplace, Walmart Connect, Walmart Fulfillment Services, to name just a few). \u00a0<\/p>\n But perhaps even more interesting in this ongoing battle of the giants is the fact that, over the course their own histories, both Amazon and Walmart have represented a distinct disruptive threat to the retail status quo. So, we decided to dissect the two companies\u2019 respective approaches to ongoing innovation, prompted by the fact that they have each chosen a simple three-letter word to define their strategy.<\/strong><\/p>\n The is the first in a two-part series exploring the different innovation approaches of the world\u2019s two largest retailers. Part Two, coming Thursday, will continue to explore the dynamic between these two companies, as well as the areas ripe for disruption that they will likely be focusing on next. (Spoiler alert: Both companies think they can help fix the American healthcare experience, and that\u2019s just the tip of the iceberg.)<\/em><\/p>\n \u201cIf we want to have a chance at succeeding in our mission, we have to constantly question everything around us,\u201d said Jassy in his letter to shareholders. \u201cA lot of invention is about trying to open doors that have historically seemed bolted shut. <\/strong>And, over the past 30<\/strong> years, we\u2019ve found one of the most important keys to unlock these doors has been a simple question: \u2018Why?\u2019 \u2018Why does this customer experience have to be this way?\u2019 \u2018Why can\u2019t it be better?\u2019 \u2018What are the constraints and why must we accept them?\u2019 \u2018Why can\u2019t we invent around that?\u2019 \u2018Why?\u2019\u201d<\/p>\n Jassy then went on to illustrate his point by outlining all the various innovations at Amazon that have started with the question \u201cWhy?,\u201d beginning with the first question in 1995, \u201cWhy can\u2019t we offer customers every in-print book?\u201d That, of course, quickly expanded to include \u201cWhy can\u2019t we also offer every out-of-print book?\u201d and then \u201cWhy not offer more than books? Why not practically everything?,\u201d leading to the company we know today.<\/p>\n But Amazon\u2019s internal interrogations have long since moved beyond the realm of what products to sell, and it\u2019s these latter innovations that have propelled major evolutions in the realm of ecommerce experience, delivery, logistics <\/strong>and advertising<\/strong>, including:<\/p>\n When laid out in a list like this, the changes that Amazon has prompted in the fundamental ways that retail works, and even what the role of a retailer is in today\u2019s world, are impressive<\/strong>. Indeed, Amazon\u2019s solutions to these questions have often resulted in unexpected answers that at first seemed counterintuitive: A retailer letting other companies sell from its store? A retailer offering a streaming content service? A retailer selling its technology to other retailers? A retailer offering its industry-leading delivery service to other merchants?<\/p>\n \u201cEvery one of these \u2018Whys\u2019 have led to significant invention, and every one of them have made customers\u2019 lives better and easier,\u201d concluded Jassy. \u201cSome of these seem obvious now, but at the time these were provocative questions that required curiosity, risk-taking, experimentation and persistence to make these into success stories.\u201d<\/p>\n And the fact is that, time and time again, it\u2019s worked out well for Amazon, leading to the ultimate question: Why stop?<\/strong> The answer, of course, is that the company doesn\u2019t plan to: \u201cWe operate like the world\u2019s largest startup in large part because of our culture of \u2018Why,\u2019\u201d Jassy added. \u201cWe don\u2019t always get everything right, and we learn and iterate like crazy, but we\u2019re constantly choosing to prioritize customers, delivery, invention, ownership, speed, scrappiness, curiosity and building a company that outlasts us all.\u201d<\/p>\n Which brings us to\u2026<\/p>\n Throughout its history, Walmart also has reinvented retail in its own way, although much of its innovations have come in the brick-and-mortar realm. After all, the internet didn\u2019t exist when Walmart was founded back in 1962, and it wouldn\u2019t come along for another 30<\/strong> years. Decades before Amazon evolved into \u201cThe Everything Store,\u201d Walmart already<\/em> was an Everything Store, with locations in nearly every town and city in the U.S.<\/p>\n In fact, the innovations that Walmart employed to become the world\u2019s largest retailer informed Amazon\u2019s playbook as that company started to build its empire in the \u201990s. Amazon adopted a very Walmart-esque prioritization on low prices as a means to tamp down competition and drive volume, as well as rapid category and geographic expansion.<\/p>\n More recently, though, Walmart has shifted somewhat out of the realm of first mover when it comes to new innovations, making its current strategy seem a bit more along the lines of \u201cbusiness as usual AND whatever Amazon is doing.\u201d<\/p>\n This isn\u2019t a criticism of Walmart. Walmart is now a well-established global company with a massive share of consumer spend, so maybe it\u2019s okay for the company to leave invention (and the inevitable failures that come along with that process) to younger upstarts like Amazon.<\/strong> What Walmart has been doing really well lately is taking the innovations that work at Amazon and translating them into its unique business. These include the launch of its own third-party marketplace and subsequent retail media offering, the debut of fulfillment services for sellers on its marketplace, offering access to data insights to brands that sell through both its stores and website, and starting to white-label some of its services for use by other retailers.<\/p>\n Here\u2019s how Walmart U.S. John Furner broke down Walmart\u2019s current opportunity to \u201cbe America\u2019s favorite retailer\u201d <\/strong>in a recent statement following the company\u2019s April investor meeting.<\/p>\n Walmart\u2019s biggest advantage in the battle with Amazon remains its stores, an area where Amazon, despite ample effort, has failed to find traction. <\/strong>Another advantage, however, might be that Walmart has tended in recent years sit back and watch as Amazon takes on the risk and expense of trying out wild new ideas, then jumps on only the opportunities that prove to be successful<\/strong>. There\u2019s a benefit to letting someone else do the failing for you.\u00a0<\/p>\n \u201cAs I look around the world, I don\u2019t see another company like Walmart,\u201d said McMillon in the investor update. \u201cOur purpose, strategy and strengthened financial future are aligned. We\u2019ve got the right business model design and we\u2019re executing against it. We\u2019re positioned well digitally, not just physically. We\u2019ll be where the customers are. We like our position, and we like our plan. We wouldn\u2019t trade with anyone.<\/strong>\u201d<\/p>\n Stay tuned for Part Two of this story, coming Thursday, which will take a look at why Walmart\u2019s wait-and-see posture in a world where Amazon is always asking \u201cWhy?\u201d might very well be the smart play. We\u2019ll also dissect the Why questions Jassy said he\u2019s is pursuing next to get a peek at where Amazon (and very likely Walmart, as well) is looking to innovate in the future (hint: think, even faster delivery and healthcare).<\/em><\/p>\n<\/p><\/div>\nThe Amazon \u2018Why\u2019 Approach<\/strong><\/h2>\n
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The Walmart \u2018And\u2019 Approach<\/strong><\/h2>\n
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