The companies Amazon and Walmart are two biggest e-commerce giants and have managed to grab their worldwide presence. Amazon and Walmart have in a way transformed the shopping experience and provides innovative experiences to their clients. The main aim of Amazon is to give a great experience to their customers and offers a wide range of products, deals, and packages. Whereas, Walmart provides their clients with wide accessibility of their different store locations in various countries and offers products at a very low cost. However, the innovation strategies used by Amazon and Walmart in their overall company strategies are completely different from each other (Walmart vs Amazon, 2016).
The innovation strategy that is used by Amazon in their overall company strategy can be considered by analysing the different business model adopted by them. The business model of Amazon consists of their online business which deals in retailing, the different web services and the Kindle system. For Amazon, their online business consists of selling various products, packages and deals to their customers at a low price with very less profit margin. Their innovation strategy in their retail business is to provide a channel to sell various products by different retailers. Various web services are also provided to their customers to extend their global presence. The web services were first inducted in Amazon as an innovation strategy which would deal in leasing out this service to various companies and people. This strategy would help Amazon to handle a lot of web services and internet servers for different firms and thus extending their global lead. Another strategy that have been incorporated into the models of Amazon was the kindle system which was first designed for reading books, but now it is available as a fully operational tablet. The implementation of this strategy has made Amazon a global producer of kindles and retailer giants and helped them to get worldwide attention (Berryman, 2014).
The important step taken by Amazon to purchase Whole Foods Market Inc for $13.7 billion is another crucial strategy which has been incorporated into the business model of Amazon. The inclusion of Whole Foods Market will help Amazon to diversify from their existing business and in the long run, it will assist them in establishing themselves as fresh food sellers. Amazon also bought Twitter Interactive Inc for $970 million and this company at that time was worth $21.5 billion. The strategy of buying Twitter Interactive helped Amazon to extend its total net worth and expand its global market (Soper, Buiso & Turner, 2017).
The key factors that are considered by Walmart while incorporating strategies into their business models include to establish themselves as low cost retailer giants, provide great exposure to the clients, investing profitability and gaining a competitive lead over their competitors. The innovation strategies of Walmart can be evaluated by its business models which include the business of Walmart in the US, the international business of Walmart and the Sam’s Club. The business of Walmart in the US is the biggest business of Walmart which has stores that expands to 50 states all throughout the US. It offers a wide range of products and services to its customers which include exchanging of foreign money, different prepaid cards etc. which helps Walmart in providing the customers both online and physical acess . The international business of Walmart expands to 26 different countries with different individual and joint ventures. This helps Walmart to expand its global presence. The third strategy that has been induced in the business model of Walmart is the Sam’s club. This club functions on an only membership basis for the customers. The segment deals in products like groceries, entertainment, fuel etc. Sam’s club provides a unique and a good quality experience to the customers as it only offers its service to the members of the club (How Walmart makes money?, 2017).
In Amazon, the aspect of technology is an important part and due to their technological advancement, it has helped them to gain a competitive advantage over their rivals and extend their lead globally. Amazon’s focus on global success is based more on invention than innovation. According to the founder of Amazon Jeff Bezos, the employees of the company should focus more on aspects of invention as it will help to build a solid base for the company (Kelley, n.d.).
The various technological advancement of Amazon is due to the different innovation strategies that they have adopted in their technological department. Some of the technological innovation of Amazon include the Amazon 1 click button that basically serves as a controller and each button corresponds to different household items. When the customer is running low on a specific item, they can press the specific button and the product will be delivered to the customers house. Amazon fresh foods is another technological innovation by Amazon where customers can order products online and the products will be delivered to the customers at their doorstep. Amazon prime air is another important innovation strategy which allows products to be delivered to the customers within 30 minutes. The secret to Amazon prime air is that unmanned aerial vehicles or drones will be used to deliver products to their customers. This innovation will provide a unique experience to clients and increase the efficiency of the operations. Other innovation of Amazon includes Amazon fire tv, Wish list option, Amazon kindles etc (Investopedia, 2015).
Another major technological strategy that has been adopted by Amazon is getting the patent for designing a floating warehouse that will be airborne and can dispatch numerous packages to customers using drones. This floating warehouse will be designed in such a way that drones will be entering the warehouse to get the products that need to be delivered and then deliver it to the respective customers. Getting the floating house patent will help Amazon not to rely on other companies to deliver their products and thus gain competitive advantage over their rivals (Titcomb, 2016).
Walmart has invested a large amount of capital in upgrading their technology to meet the international standards. Various technological innovations have been inducted into Walmart that includes free pick-up online shopping, mobile apps, improvements in web services and maximum optimization of inventory stocks. The free pick up online shopping at Walmart provides free pick up to customers and this strategy is bringing a lot of new customers to Walmart. The mobile apps of Walmart provide the customers an easy and a great experience for shopping and reduce time consumption. The improved web services of Walmart have made the shopping experience for the customers a great experience and most of the purchases of products in Walmart are done through their web services. The use of technology to optimize the inventories of Walmart have helped them to serve customers in a better way and reduced the overall cost of transportation and material handling (Grill-Goodman, 2015).
The supply chain of Walmart is one of the most developed supply chains among the top most companies. This is due to the various technological initiatives taken by the company which enables it to predict market demands with great precision, track and predict stock levels, check customer services and creates an effective course for transportation of stocks. Walmart has also designed the large database, Retail Link, which uses a global satellite system to connect to business analysts who then predict the supplier demands and show real-time information of ongoing deals from the money registers of Wal mart’s outlets. Another example of the use of technology by Walmart is the use of Radio Frequency Identification (RFID) tags that can be used to track the large quantities of stock moving along its vast inventory systems. All the above technological initiative taken by Walmart has helped them to establish themselves as E-commerce giants and extend their lead on the global market (Lu, 2014).
Amazon has been able to extend their global reach over their competitors by a very long margin. The internal environmental factor that added to the achievement of the Amazon was that it was able to adapt to new changing global market environment and have been able to possess the capacity to hold their clients for a longer stretch of time. The other internal environmental factor that added to the success of Amazon is due to the properly designed web services, well-built infrastructure and various automated retail stores. The factors in the internal environment that slowed down the growth of Amazon was because it dealt with various ranges of products and services and were not able to construct a well-paved path for one business venture (UKESSAYS, 2015).
The key variable in the external environment that helped in the success of the various innovation strategies adopted by Amazon was because the online retail business was not very popular and the opportunity for Amazon to expand and diversify their business in the global market was very large. One more factor that added to the success of Amazon was the incorporation of companies like Whole Foods, Twitter Interactive etc that helped them to expand their total net worth and maintain the competitive advantage over their rivals. The implementation of the innovation strategies adopted by Amazon was slowed down due to some external environmental factors such as competition from rival companies like Walmart, E-bay etc (UKESSAYS, 2015).
The success of the innovation strategies adopted by Walmart in its overall company strategy is because of some factors in the internal environment. The factors include that Walmart was able to project themselves as a successful brand image which helped them to retain their clients and due to the generation of a large amount of revenues during the span of last 5 years. Walmart was also successful because they had long term flexible goals which helped them to adapt to the new global business environment. The internal factors that reduced the efficiency of the strategies of Walmart were due to the policy of Walmart to establish themselves as low cost retailers in the market. Due to the low-cost policy of Walmart, proper customer standards of the products were not met which had led to a lot of customer dissatisfaction (UKESSAYS, 2017).
The success of the innovation strategies adopted by Walmart goes to some factors in the external environment which includes the fact that Walmart has competitive advantage over their rivals due to their properly designed retail stores and it helps them to attract many new customers. Properly designed web services and various platform for advertising also helps Walmart in attracting many customers. The factor in the external environment that derails the growth process of Walmart includes the treats from their competitors which can take the market shares away from Walmart. Dealing with taxes, wage levels etc in different countries also provides a challenge for Walmart (UKESSAYS, 2017).
Due to the various innovation strategies adopted by Amazon, the majority of the innovations occurring in Amazon is due to incremental innovation which in a way makes the process of innovation less risky for Amazon. Amazon has great knowledge on the current scenario prevalent in the global market which is because of the failures underwent during their early days. According to the founder of Amazon Jeff Bezoz, the employees of Amazon should focus more on inventions than innovations and Bezos strongly believe that this philosophy would lead them to global success. Most of the innovations occurring in Amazon is due to incremental innovations which will help Amazon to cultivate a strong culture of innovations (Kelly, n.d.).
On the other hand, the innovations that occur in Walmart due to the different strategies adopted by them results in both process and product innovations. Most of the innovations happening in Walmart is due to product innovations because Walmart spends a lot of capital in researching and gathering information about their products and implement changes to improve it. This helps Walmart to gain competitive advantage over their rivals and expand their global presence. The process innovation in Walmart helps them to update their current processes and services prevalent in their retail store in different countries. It also helps them to form a proper relationship with their providers so that they can comprehend the products they are receiving to maintain international quality standards (UKESSAYS, 2017).