October, 2020 - Empower

Media

The X-Factor: A Closer Look at Consumers in Q4 2020

How are you feeling as we head into the holidays? It’s been quite a year. For many consumers, life is a bit tricky right now. At Empower, we wanted to take a closer look.

Like many of you, we have read reports of people shopping more online and spending the same amount they spent last year, or maybe spending less. Perhaps they’re shopping earlier or waiting. But we hadn’t read studies of how people feel. There is plenty on what people may buy (Backyard heaters) and not a lot on what’s going through their heads as they envision the holidays in 2020.

At Empower, part of being an Un-Holding company is having permission to follow that intuition. That little “what if” or “why” question that nags in the back of our minds. It’s unlocking the why that helps make our work resonate, stick and support our audiences when they need it most. We want to intercept, not interrupt. So, we fielded a study earlier in October and were quickly inspired by what consumers told us.

What did we learn? Consumers are holding a lot right now. The desire for the holidays to be normal is real with visions of cozy dinners, twinkling lights and a few presents abound. But, so do the worries, the fears and the dread of being alone or missing someone who isn’t at the table this year.

We’re calling this observation the X-Factor. Merriam-Webster defines the X-Factor as a circumstance, quality or person that has a strong but unpredictable influence.

This year, the contradictory nature of the emotions consumers are feeling will have an unpredictable influence on how they approach the holidays.

You may have this data in hand already. You may have plans set. But if 2020 has taught us anything, it’s important to be flexible and open to new thinking. Small nudges of insight in the right direction may just help your brand or product meet the needs of consumers today.

For a detailed look at this primary research study, fill in your information in the form below to instantly download a copy of our full report.

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Analytics

Updated Data Science Monitors COVID Hot Spots, Potential Lockdowns

“How severe is the growth of COVID cases in certain parts of the country?” It’s one of many monumental questions we’re currently asking ourselves.

Over the past twenty-three weeks, we’re learning that our “New Normal” changes daily as new, credible information is available. With cases still on the rise, and the country still predominantly open (for the time being), we need to be utilizing a KPI which can allow you to determine if a state could be close to major changes in restrictions and to understand if consumers would be less likely to shop in the future based on COVID.

At this time, our approach to evaluating COVID will not be about aligning a date to when an improved retail environment will happen. Instead, we will be showing hot spots and trends in COVID new cases by state which vary when evaluating recency vs. ongoing longer average. As constant change continues to churn out new policies, restrictions and trends, this data will be crucial in predicting consumer and governmental behavior in these spots.

In the map below, we are taking the most recent 3-day average of % new cases divided by the 14-day average of % new cases at the state level to determine which states are regressing in their health as opposed to improving. Any state with above a 100 index would be in that regression, whereas any below 100 are improving.

Results through 12/20/20 - Map updated on 12/21/20

Just as the world changes daily, we will continually evaluate our approach to ensure we stay close to the ongoing issues impacting business.

Analytics COVID-19 Data Modeling

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Creative

How Brands Can Avoid Toxic Self-Love

“You’re good enough.
You’re smart enough.
And doggonit, people like you!”

This daily affirmation comforted Stuart Smalley, a Saturday Night Live character played by Al Franken in the ‘90s—long before his political rise and fall.

Stuart was an unlicensed “caring nurturer” who looked in the mirror and delivered those empowering phrases. He even famously attempted to boost Michael Jordan’s confidence.

It’s fun to watch this mental psych-up, but it’s unfortunate when a brand talks to a mirror. A brand’s reflection sometimes becomes an ineffective message it puts into the world:

“I have enough value.
I have enough positive reviews.
And doggonit, customers like me!”

The mirror has to move so brands can look at their audience instead of themselves. In a world where authenticity and backing up your words means so much, the agency’s job is to mediate the message. A brand may be rightfully proud of goods and services, but how can we communicate that in a way that’s more than a mantra in a mirror?

For starters: ask why your brand is ‘good enough’ and ‘smart enough.’ Display those things in your ads. Show instead of tell. Be it instead of just saying it. And when you talk, talk like a person—to other people.

You recognize the brands that do this well. From a burger joint who sounds like your clever best friend on social media to a computer company inviting us to a more convenient life, we engage, and we buy.

If you don’t believe me, check out a report on the “Importance and Impact of Human-Like Brand Communication” from Braze and Forrester Consulting. I’ll summarize their findings for you: “Very.” Human-like communication is very important. Don’t speak to your reflection, converse with others.

And if your brand really needs a quick boost of confidence, recruit Michael Jordan for your ads.

Brand Communication Creative Creative Media

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Media

Making Sense of Sponsored Search on Amazon and Walmart: Part 4 – ROAS and Profitability

Part four of an installment series examining the different ways of approaching attribution, ad ranking, profitability, and other mechanisms across the sponsored search offerings of Walmart and Amazon.

In the previous installment, we took a look at offline revenue across both platforms. Within this article, we’ll focus on how ROAS and profitability are taken into account within both Amazon and Walmart’s sponsored search offerings.

ROAS and Profitability

Both retailers have their own approach to ROAS. While Amazon’s uses a more generous lookback window, Walmart’s deploys less orthodox methods. Amazon excels, however, in providing access to back-end metrics (net PPM, avg. sales price, etc.) that helps advertisers assess true profitability.

Amazon
Amazon’s Sponsored Search platform (Amazon Advertising) is all about ROAS. Their attribution approach, as defined in Part 2 of this series, is designed to ensure a strong output from advertiser dollars. The fact that it’s the world’s largest online retailer and features ad formats that exists inches from purchase (i.e. sponsored search ads) doesn’t hurt either.

As noted in previous installments, they view attribution across a 14-day, click-based scenario, they flood their results pages with sponsored ads and they have no measures in place to dissuade competitive bidding or non-incremental buying. It’s all about revenue, and the ROAS advertisers typically see within Amazon Sponsored Search is a testament to this. ROAS marks in the 30+ range for brand spend are not out of the ordinary in many cases. But is this ROAS inflated? Can it be compared evenly to other platforms with varying, some might say more modest, approaches?

Whether or not their numbers are inflated is for advertisers to decide. Devising a methodology for focusing on incremental, understanding when competition is most likely to eat into sales, these are hurdles advertisers need to account for. The good news is, if they have their ducks in a row, every dollar spent on Amazon can be whittled down its true profitability metrics.

As my colleague Ryan Bocken alluded to in his article, Amazon provides all the tools needed to decipher profitability within its Vendor and Seller Central platforms. Here, advertisers can understand how their products are performing organically, and use that information to decipher how much profit they’re deriving from their advertising efforts. The age-old question of “what’s my advertising spend really getting me?” is answered via Amazon Vendor Central.

Advertisers can simply take their average sales price, net PPM, then take out average. cost of conversion for that particular ASIN to get to the root of everything. It’s a fantastic device that connects the dots in a manner other advertising channels can’t fathom. And one that definitely helps set Amazon—and their sponsored search—apart from other digital commerce platforms.

Walmart
Like Amazon, Walmart’s Sponsored Search platform uses ROAS as its main indicator, but it’s nowhere near as simple as Amazon’s 14-day click-based window. As detailed in Part 2, Walmart’s attribution efforts are more akin to a hybrid approach between paid search and programmatic display. It brings in the click-based attribution elements of search (3-day click) along with the view-based attribution elements of display (1-day view) to create a Frankensteined revenue output.

How they approach this output may be an attempt to counteract the handicaps inherent to their system, detailed in previous installments:

No offline revenue, despite Walmart being the largest brick-and-mortar-based retailer
Multiple, advertiser-friendly safeguards within their ranking and auction dynamics
- These limit unnecessary spend, but also limit ROAS

Add to this the previously mentioned notion that image-based, product listing ads (which both platforms focus on) deserve some level of view-through credit. They’re a hybrid search/display unit, always have been. They’re as much an introduction to (or influence on the purchase of) a product as a display ad viewed at a point further up in the funnel. Maybe Walmart is correct in limiting its click-based reporting, but then supplementing overall revenue with a small view-based window.

In Conclusion

So, how do advertisers assess these two platforms on a level-playing field?

It’s tricky, but the previously mentioned caveats will all come into play when comparing Amazon Advertising and WMG’s sponsored search offerings. For example, if you spent $100k across each and saw a 10.0 ROAS within Amazon and a 5.0 ROAS within Walmart, it doesn’t necessarily mean Amazon performed twice as well. The various factors discussed thus far across auction dynamics, attribution approach and offline revenue should be used to understand the value of sponsored search across platforms.

But if you only take one nugget of truth away from this, let it be the following: don’t discount Walmart simply due to a lower ROAS. As discussed, not all ROAS is created equal. Nowhere is this statement truer than when comparing these two platforms. At their roots, they both offer ad placements that help influence purchase right before the actual moment of purchase. A lot can be won or lost in that moment. Advertisers need to understand how to gauge true success to keep from getting lost themselves.

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Making Sense of Sponsored Search on Amazon and Walmart: Part 3 – Offline Revenue

Part three of an installment series examining the different ways of approaching attribution, ad ranking, profitability, and other mechanisms across the sponsored search offerings of Walmart and Amazon.

In the previous installment, we took a look at attribution across both platforms. Within this article, we’ll focus on how they each take offline revenue into account.

Offline Revenue

Neither retailer tracks offline sales generated by their sponsored search ads online. Offline revenue plays more of a factor in Walmart’s results, but Amazon’s effect on offline shouldn’t be discounted.

Amazon
Amazon is nearly a 100% online storefront. They do boast physical locations in larger metropolitan U.S. cities in the form of their Amazon Books and Amazon 4-Star locations. Inventory at these locations, however, is extremely limited. The amount of attributable revenue driven at these locations based on interactions with paid ads could be something worth tracking if they did a wider roll-out (with more shelf-space) and reached more consumers.

Despite the lack of physical locations, Amazon can often be credited with influencing purchase in-store at the physical locations of other retailers. Amazon’s site plays a pivotal role in the research process of a lot of purchases made off Amazon, as well as on.

Sellers can create brand stores and deploy PDP-based enhanced content within Amazon’s environment, making their Amazon storefront an extension of—or in some cases a replacement for—their own site. Consumers often use it as a one-stop-shop to leaf through reviews or gain a better understanding of the product and its overall features. They pull in everything they can within Amazon’s site before making a final purchase decision, which has the potential to occur somewhere other than Amazon.

For example, a manufacturer could have a paid search ad that takes a consumer to Amazon. That consumer might also end up clicking on a sponsored search or display ad within Amazon while checking out their brand. Once they hone-in on the product they’re looking for, they may do some comparison shopping off Amazon and discover their local Walmart (which is a half mile away) offers that same product at pricing better than Amazon’s.

Now, Amazon didn’t technically bring in that sale for the manufacturer, but it played a huge part influencing the eventual in-store sale at Walmart. Despite being almost 100% online, Amazon and its various on-site ad formats still play a major role in eventual in-store purchases.

Walmart
Unlike Amazon, Walmart thrives on physical, in-store sales. As of Q1 2020, there were over 4,750 Walmart locations in the U.S. alone. They did recently see a 74% increase in online revenue due to COVID, but they’re still known more as a traditional, brick-and-mortar retailer.

For Walmart, online sales don’t tell the whole story. It’s in their best interest to demonstrate how media purchased via their advertising arm, Walmart Media Group (WMG), can help drive both online and offline purchases. They do just that for their display media. Display buys via WMG have the added benefit of being able to track both online and offline sales. Helping to demonstrate the influence display media has on consumers beyond their interactions with Walmart’s site.

Unfortunately, for sponsored search ads bought via WMG, this isn’t the case. Sponsored search ads tally only online purchases within their reporting metrics. No offline data is captured or included within its outputs.

Now, the idea of incorporating offline revenue does carry with it a certain view-based assumption, one that has historically been applied to display and not to search. Display is a medium that contains imagery, and influences via this imagery, laying the foundation for a potential future interaction with the brand.

One can argue that sponsored search via commerce platforms such as Amazon Advertising and WMG also carries some weight as it relates to view-through and potential offline interactions. Sponsored search within WMG is an a.) image-based format that b.) captures a consumer’s attention in hopes of c.) influencing an eventual purchase. Whether that purchase happens directly as a result of clicking on that search ad or indirectly as a result of simply viewing it, it ultimately influenced the purchase. The same goes for offline; whether someone clicks on an ad and converts online or eventually converts in-store, the ad influenced the eventual purchase and should get credit.

A typical display buy on WMG can expect roughly 60%-80% of its reported revenue from offline sales. If offline data was accounted for via sponsored search ads, they could expect to see at least a marginal percentage bump in additional revenue driven in-store.

The moral of the story: Walmart Sponsored Search Ads deserve extra credit for their potential to drive offline sales within their physical locations. Their reporting doesn’t readily account for this, but it’s inclusion of 24-hour view-through conversions can help offset the difference for the reasons noted above.

In the final installment of this series we’ll review how both Amazon and Walmart view profitability and how each accounts for margin.

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Making Sense of Sponsored Search on Amazon and Walmart: Part 2 – Attribution

Part two of an installment series examining the different ways of approaching attribution, ad ranking, profitability, and other mechanisms across the sponsored search offerings of Walmart and Amazon.

In the previous installment, we reviewed the auction and ranking dynamics of both platforms. Within this article, we’ll focus on how attribution is accounted for across each.

Attribution

Once a seller makes a sale, how that sale went down (and when credit is given) is tallied differently across these two retailers. Very differently.

Amazon
Their attribution is rather straight-forward. They offer a 14-day click-based window. This window applies across the brand. For example, if someone clicks on a sponsored ad, then purchases any product from that brand within 14 days, that click is credited with the conversion.

A good percentage of the revenue across this 14-day window can be attributed to non-direct click-based conversions i.e. someone clicking on an ad, then coincidentally purchasing another product from the brand’s catalog later.

Looking at Amazon sponsored search revenue data from a subset of our client’s data, we found that even the specific days within the 14-day window demonstrated a greater disparity in revenue distribution than anticipated. Below is a look at the percentage of total revenue driven during each day of the 14-day window:

Roughly 25% of the revenue derived from the 14-day window comes in after that initial 3-day window. This will be important to remember as we move into discussing how Walmart’s standard metrics interpret this same data.

Walmart
Walmart’s application of attribution metrics, along with their lookback windows, are a bit more of a corkscrew. They offer advertisers multiple choose your own adventure-esque routes to tallying revenue. The below details their attribution metric naming conventions, along with associated conversion windows:

Direct Click Revenue (3 day) – Attributed revenue via direct click of an advertised item
Direct View Revenue (1 day) – Attributed revenue via view of an advertised item
Brand Click Revenue (3 day) – Attributed revenue via direct click of the same brand as the advertised item
Brand View Revenue (1 day) – Attributed revenue via view of the same brand as the advertised item
Related Click Revenue (3 day) – Attributed revenue via direct click of same brand & category as advertised item

Walmart’s default reporting metrics include a combination of (1) Direct Click Revenue and (2) Direct View Revenue for sponsored search. Including view-through metrics is odd enough for a search buy, and many have called out this approach as a guarantee of over-reporting, seeing as other retailers (Amazon) are solely click-based, but there are a few nuances that make their overall approach—and the inclusion of view-through—more palatable:

Walmart’s click-based attribution window is a mere 3 days, whereas Amazon’s runs 14 days
- As noted, Amazon would only see about 75% of the revenue it traditionally sees if its conversion window was pulled back to the three-day mark
Walmart only uses a 1-day view-through window within sponsored search
- Incorporating view-throughs in search isn’t a normal approach, but …
Both Walmart and Amazon’s ads are shopping ads, which include text and imagery
- The inclusion of imagery, despite being classified as search ads, should open these ads up to a similar “view-based” approach as seen across more display-focused tactics

One caveat would be related to carousel ads within Walmart’s interface. These exist as sponsored ads at the bottom of the page, and viewability can certainly be an issue (seeing as Walmart doesn’t adhere to IAB standards). It’s something to keep in mind regarding the validity of 1-day view inclusion (i.e. over-reporting due to views that aren’t really views).

Next, we’ll be reviewing the offline revenue approaches of both Amazon and Walmart. Not to give away any trade secrets, but neither retailer accounts for offline revenue generated via sponsored search. Despite this, there are assumptions that need to be made as it relates to potential offline gains.

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Making Sense of Sponsored Search on Amazon and Walmart: Part 1 – Auction and Ranking Dynamics

Part one of an installment series examining the different ways of approaching attribution, ad ranking, profitability, and other mechanisms across the sponsored search offerings of Walmart and Amazon.

The digital commerce landscape is not a level playing field. Everything is skewed in the retailer’s favor. Requirements, margins, stock availability, product visibility – all dictated by the Amazons, Walmarts and Targets of the world. Even the most basic elements are an uphill battle for most sellers, filled with unexpected twists at every turn.

Once sellers get a steady footing as it relates to the fundamentals (i.e. making their products available), they then need to worry about turning a profit. And as it relates to what’s truly profitable, ambiguity rules the scene. Nowhere is this more apparent than in the attribution processes these retailers have deployed within their advertising platforms.

Take Amazon and Walmart, the two heaviest hitters. There are a lot of front-end similarities that exist across their sponsored search advertising platforms. They both:

Offer self-service, sponsored search functionality for sellers looking to advertise on-site
- Auction-based, CPC functionality similar to Google, Bing, etc.
Use in-house tech to power and support their sponsored search platforms
- As opposed to using outsourced, rebranded technology
Provide advertisers the option of creating campaigns via manual or automated methods
- Advertisers prefer manual, but deploying automated has its advantages as well

But once the conversation shifts toward backend functionality—how and when ads are displayed, how revenue is attributed, etc.—things veer in a very different direction. They both have drastically different ways of approaching backend metrics that tend to skew their results, making it difficult to compare performance across platforms.

To accurately compare both Amazon and Walmart’s sponsored search platforms, we’ll be reviewing a few approaches respective to each. In this series, we’ll take a look at:

Auction and ranking dynamics
Attribution
Offline revenue
ROAS and profitability

Auction and Ranking Dynamics

Auction and ranking dynamics set the stage for the divergent path these two advertisers take. In this instance, it’s the upfront serving functionality and placement options inherent to each ecosystem creating the divide.

Even at the fundamental level of auction type, these two platforms differ. Amazon takes the standard approach of a second price auction (2nd place bid + $0.01), whereas Walmart uses a first price auction (highest bid, as is) approach typically seen within display environments. From there, it only intensifies.

Amazon
Amazon’s approach to ad ranking is designed to drive revenue, plain and simple. It lets advertisers occupy almost any spot within the top row of the in-grid search listings. There are also multiple, further down ad slots that can be occupied by any number of advertisers to go along with their sponsored display and digital display placements. See example below for the nonbrand query diapers newborn:

This creates an ideal scenario for larger advertisers looking to own the page. It ensures no ads (beyond their own) can sneak into the Amazon search results grid and steal revenue at the very bottom of the funnel, protecting their prior upstream marketing investments. Some advertisers are even willing to accept a loss on their brand term-specific investment if it means defending against conquesting.

For most advertisers, though, this format presents a bit of a catch-22. They know they need to defend their brand terms when consumers search for them, but:

Are there always competitive advertisers looking to steal share?
Is every impression up for grabs as Amazon would lead them to believe?
If every impression isn’t conquested, are advertisers bidding against themselves?

Bidding on brand-focused auctions that would have shown their product naturally via an organic listing is a great example. Should these advertisers focus on defending their turf if, for a vast majority of the time, there is nothing to defend against? See the example below for the brand query huggies:

This is where the idea of incremental revenue enters the conversation. It comes up in relation to Amazon a lot. Advertisers want to know:

a) What revenue is incremental, i.e. what did we need to bid on?
b) What revenue would we have gotten organically, i.e. what did we not need to bid on?

When an advertiser owns their brand terms organically, they shouldn’t have to bid on them. But then again, there are instances beyond conquesting when it’s needed. For instance, advertisers could advertise on established/organically owned products to:

Bring attention and potential sales to newer products
Attempt to drive additional sales for overstock
Push sales for less popular products

The thinking being, if consumers came in searching for a specific, popular product, then that product would a.) show up organically alongside the sponsored ad and b.) be bought anyways. The goal would be for the consumer to buy the intended, popular product and the advertised, less popular product.

As noted, there are ways to use brand term bidding to the advantage of advertisers. Knowing when best to do this is the difficult part. Advertisers should own their brand terms organically, but how do they know when they need to defend against conquesting? And how can one tell when those situations arise if Amazon is designed to show an ad in every potential auction?

It’s gaps like these that make Amazon a difficult sell for some advertisers. It’s a damned if you do, damned if you don’t environment, wherein a lot of the advertising spend is compelled by revenue-related FOMO. The idea of, “If you’re not there, your competition will happily take your place.”

But it doesn’t have to be that way.

Walmart
Unlike Amazon, Walmart puts a premium on its organic listings. You typically won’t see a search results page dominated by paid ads. In most instances, consumers will barely know ads are present due to the restrictions within their auction dynamics.

Ad Qualifier
Within Walmart’s search environment, a product must rank within the top 128 products to qualify for advertising. This means random advertisers cannot show up within the sponsored ads for a term they bear no resemblance to. It also means the ads that do appear will be relevant.

On the other hand, Walmart still doesn’t have the capacity to include negative keywords, which limits control on the advertiser’s end.

Ad Placement
As of this writing, Walmart only allows advertisements to occupy specific slots within their in-grid listings. Positions 3, 5, 7, 8 and 12 are the only slots that can contain an ad. There have been rumblings of Walmart switching this approach and adopting a more Amazon-esque layout wherein search ads can appear within slots 1-12. Currently, most sponsored ads we’ve seen are still limited to specific slots. This approach corrals a few things that are typically rampant within paid search advertising:

1) Ensures organic listings own the top ad positions and help guide the results
2) Eliminates the need to bid heavily on brand terms out of fear of conquesting
3) Guarantees an organic-driven ecosystem due to ads only occupying non-premium positions

Ad Quantity
There can be a maximum of two in-grid ads per page within the search results for any given query. Even though ads can appear in one of five slots as noted, they will only occupy two of those slots at any given time. Again, this is barring any changes to Walmart’s overall approach to ad slotting.

Ad Incrementality
Walmart’s ad slotting approach helps to alleviate this “incrementality” issue. The majority of clicks are driven by the first two results. Ads can only appear in position three at best, meaning both brand and nonbrand can drive incrementality.

Walmart’s self-imposed handicaps are another reason the ROAS-based metrics across Amazon and Walmart are not apples to apples. These factors help alleviate concerns around unnecessary competition, the need to defend conquesting, and incrementality, but they also weigh on Walmart’s ability to drive revenue and volume via sponsored ads. If they went the route of overwhelming their results pages with ads, which they may soon do, their volume and ROAS outputs would surely benefit.

To sum it all up, when it comes to auction and ranking dynamics, Amazon leaves the barn door wide open, whereas Walmart closes it a bit. This allows Amazon to drive impressive back-end metrics, but at what cost to true profitability?

In the next installment of this series, we’ll review the attribution processes of both Amazon and Walmart and shed some light on how each accounts for revenue and how these varying approaches alter outcomes within each platform.

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Walmart+ Goes Toe-to-Toe with Amazon Prime

After a series of delays, Walmart’s subscription service, Walmart+, officially launched on September 15th.

Amazon’s online retail practices are second to none. That’s no big secret. The best example is their approach to logistics. Their supply chain is a technological marvel, revolutionizing the concept of delivery. It also serves as one of their biggest differentiators.

Two-day, one-day, same-day shipping at no extra charge (beyond a simple subscription fee). Anything and everything at the consumer’s fingertips. More than 10 million items available for free, one-day shipping. An additional three million more are available same-day. All this via their subscription-based service, Amazon Prime.

It’s brought the idea of free, expedited shipping to the mainstream. While also helping put Amazon first in the consumer mindset when it comes to online retail destinations. Research starts there, and transactions often end there.

Despite all this, if consumers find an item at a lower price elsewhere guaranteeing a similar delivery speed, their allegiance to Amazon evaporates quickly.

Enter Walmart+, Walmart’s oft-delayed, subscription-based service designed to compete with Amazon Prime. The biggest selling point is, you guessed it, free shipping. They absorb the costs associated with the logistical nightmare that is getting a single package of baby wipes to the foyer of your apartment building in under 24 hours, in exchange for a yearly (or monthly) fee.
With the launch of Walmart+, the world’s largest in-store retailer is going head-to-head with the world’s largest online retailer. Despite all the talk about Amazon’s stock price, Jeff Bezos’ net worth, etc., Walmart is still the bigger sales draw. They nearly doubled Amazon’s revenue in 2019. But keep in mind, Amazon still owns the online arena, meaning Walmart will be taking the fight to Amazon’s doorstep with Walmart+.

This is a world-class title bout and, with any such event, the two combatants need to be measured against each other before duking it out. So, let’s look at the tale of the tape:

Experience: Amazon has been supporting its highly successful Prime efforts for roughly 15 years now. Walmart+ is brand new, twice delayed, and rather unproven. But let’s face it, the pandemic-related delays were out of their control. Amazon ran into similar issues, pausing one to two-day shipping for most items earlier in the pandemic to safeguard warehouse shelf space/delivery routes for higher priority items. The pandemic still has the potential to wreak serious havoc on both retailers, but Amazon has more experience weathering the storm, if you will. Edge: Amazon

Affordability: Prime comes in at $115/year, while Walmart+ is priced slightly lower at $98. Both price points often pay for themselves in shipping costs and perks alone, making cost negligible. Edge: Push

Product Availability: Amazon Prime has nearly 20x the sheer number of products eligible for same-day delivery as Walmart+. Walmart will surely add more as it goes, but in the early stages, this one’s a no-brainer. Edge: Amazon

Grocery-Related: Amazon owns Whole Foods. Prime members in certain locations can get 2-hour delivery free of charge. They offer similar online delivery perks via Amazon Fresh to certain locales. Amazon also recently opened their very first Amazon Fresh location in Los Angeles. Several others will be rolling out in Illinois and more in California soon after. They’re designed to provide consumers a layer of convenience and technology beyond the typical grocery interaction, while also offering much more competitive pricing than your typical Whole Foods.

Walmart+ offers grocery delivery as well, with prices often much lower than Whole Foods. They’re also the largest grocer in the country, with an estimated 26% of the U.S. grocery market share. Their sales are more than double Kroger’s, and quadruple Albertson’s. But with more Amazon Fresh locations potentially on the horizon, they could see their market share start to dwindle. Edge: A push… for now

Additional Perks: Both sides boast an array of peripheral perks poised to lure consumers in. Amazon gives members free access to their Amazon Prime streaming service (The Boys alone is worth the price of admission), additional discounts at their retail storefronts, and more. Walmart+ offers subscribers gas discounts ($0.05 per gallon), in-store wait-free checkout and scan-as-you-go options, and other benefits. Overall, a consumer’s interest in these additional perks will depend on their needs, life stage, location, etc. Edge: Push

After sizing each participant up, it looks as though Amazon holds the advantage. The experience factor alone will make it difficult for Walmart to come close to unseating such a juggernaut. A lot can change in a short period of time, though. As noted, Walmart+ is incredibly unpredictable.

Even the seemingly invincible force that is Amazon felt the pain associated with the pandemic. Their next-gen logistical efforts were heavily impacted by a) demand and b) unpredictability. If a similar COVID-induced panic befalls the U.S. between now and end of year, Amazon could falter. And you can guess who will be there to round up those disenfranchised consumers unwilling to wait an additional day for baby wipes.

It’s the oft-unspoken truth in today’s retail world: there’s no reason for loyalty. If a consumer’s preferred retailer doesn’t carry something, or they find it cheaper somewhere else, there’s little to no hesitation before making a purchase-based switch. Part of the reason Walmart saw such fantastic growth in online sales during the early stages of the pandemic (aside from online skyrocketing in general) was due to Amazon’s inability to fulfill non-essential items. People that normally bought through Amazon ended up going elsewhere because they were unable to fulfill their needs at the velocity they’ve become accustomed to. A velocity Amazon has historically made table stakes.

If people experience the slightest hint that product delays are coming (especially approaching holiday), they’ll bail on Amazon for alternate retailers. This doesn’t necessarily mean they’ll cut ties with Prime, but it also doesn’t mean they won’t give Walmart+ a whirl either. As noted, the shipping-related savings often covers the cost alone. This means that the same Americans signing up for Prime every year may realize having another option with the same benefits might be worth it.

At the very least, this will make for an (even more) interesting holiday shopping season.

Link:

https://www.cbsnews.com/news/walmart-earnings-q1-revenue-growth-coronavirus-pandemic/

Link:

https://www.foodindustry.com/articles/top-10-grocers-in-the-united-states-2019/

Link:

https://www.cnet.com/news/amazon-prime-vs-walmart-plus-which-delivery-service-gets-you-more/

Link:

https://blog.aboutamazon.com/shopping/introducing-the-first-amazon-fresh-grocery-store

Link:

https://techcrunch.com/2020/08/27/amazon-opens-its-first-amazon-fresh-physical-grocery-store-in-la/

Amazon eCommerce Media Walmart

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“I have enough value. I have enough positive reviews. And doggonit, customers like me!”

ROAS and Profitability

In Conclusion

Offline Revenue

Attribution

Auction and Ranking Dynamics

“You’re good enough.
You’re smart enough.
And doggonit, people like you!”

“I have enough value.
I have enough positive reviews.
And doggonit, customers like me!”