While the Internet was still young...Walmart v. Amazon

Today is, by the way, the 150th anniversary of the publication of Darwin's Origin of Species and in case it isn't bedside reading (or bathroom reading), it obviously dealt with survival of the fittest or at the very least issues of natural selection.  Actually the book was written for the non-scientist and is a great read if you are into that sort of thing.

An article in the NYTimes today (Walmart v. Amazon) is coincidental. I can remember vividly early press and financil reports on Amazon when the CEO was asked if they ever ever ever  could turn a profit and he flatly said he didn't think so.  It was all about distribution, supply, warehousing etc. and a very tough nut to crack.  As to Walmart, I've known one of the Walton kids since about 1980 (brother is that a long story) and it was before he joined the family business which at that point was all about Target v. Walmart.  Walmart's plan was simple. Price.

I encountered  the Walmart price issue first hand in the middle 90s when I headed a  madia planning and buying team for video releases (vhs of theatricals), and we had discussions (if you can call them that) with Walmart regarding the pending release of Babe - the pig movie. 

They were the 800 pound gorilla and would pre-buy a million but at a price that simply had to be the best price or no deal. They also wanted guaranteed advertising (we spent about 8 million $ in 2 weeks) and all kinds of other things. They got it and frankly those million or so units shipped to Walmart were a lost leader both to us and to them.  They could do what they wanted because, simply, they could and there was no one biting at their heels.

Enter Amazon, now, a piddling orphan compared to Walmart but with enormous brand cache and recognition. They have fixed distribution and are doing as well as anyone in this economy.  But what they bring to the table is competition, niche as it may be.  In the 12 years or so of existence, it has morphed into an Internet giant and the online equivilent to the box store Walmart concept.

My issue here, and it relates to Darwin (which you must read) is that all big species faced their greatest threat when they had smaller species to contend with.  These smaller guys disrupted the chain - futzed with the food chain so to speak - and the big guys either had to adapt or die off.  It may take a while but that is the name of the game.  The  NYTimes quote is very telling:

“If you are Wal-Mart, you want to have your proportional piece of this change in consumer behavior,” said Scot Wingo, chief executive of ChannelAdvisor, which helps retailers sell online. “You can even paint a scenario where e-commerce one day is 15 percent of all shopping, and that could really start to erode Wal-Mart’s offline business.”