Similar to the fierce competition being exhibited in the pool at the Rio Olympics, two of the largest retailers in the world (Walmart and Amazon) are closely monitoring each other’s progress and appear to be doubling down on their investments in logistics and supply chain cost management. Walmart (#1) has made the latest move in this chess match for retail dominance with their $3 billion acquisition announcement of Jet.com, a shopping site that uses a mix of money-saving techniques in order to sway shoppers from places like Amazon (#8).
Outwardly this purchase is projected to bolster Walmart’s ecommerce capabilities which, while growing, are generally perceived to be less than adequate for such a large company. Inwardly, the acquisition is also expected to enhance Walmart’s already extremely sophisticated supply chain solutions with proprietary algorithms that will further lower supply chain costs…the new competitive beach-head being established by both organizations. And lest we forget to mention it, Jet.com’s CEO Marc Lore is a declared anti-Amazon executive with a history of experience in beating Amazon at its own game.
Amazon has of course been famously working towards the realization of its drone fleet which is projected to cut last-mile delivery costs nearly in half. Once regulatory hurdles are overcome, this could become a logistics game-changer that could eliminate competition across a vast array of product areas as it is thought that nearly 90% of Amazon’s online assortment could be delivered via drone. Combined with an alternative Uber-like approach to local delivery services and even trucks loaded with goods perpetually on the move in major urban areas (facilitated by drone delivery, of course), Amazon’s goal is to be able to measure delivery times in minutes…not days.
In case you think this is a bit far-fetched and well off into the future, Gartner is predicting that by the end of next year, nearly 20% of all supply chain and logistics activities will be using drones.
For the rest of the retail world, as we watch these industry goliaths trade body-blows, it might pay to invest in getting our own supply chain costs in order. And indeed, it appears that this investment is already happening. According to Gartner, in the next two years, the deployment of end-to-end supply chain solutions will increase up to 50%. Smart retailers are realizing that, while they don’t have to match Amazon and Walmart’s logistic capabilities, they still need to remain competitive with them.
Of course, in addition to cutting costs, the customer-facing, competitive differentiators for retailers have been, and always will be, outstanding products and an integrated omni-channel customer experience that they cannot find anywhere else.
It appears that we’ve got our work cut out for us…