1. Based on the case description about Amazon, please identify five forces "who they are" and analyze the role of IT" as to how it contributes to increase the competitiveness of the company (1 point). Who & Status Role of IT Rivalry Potential Entrant Customer Supplier Substitute BUSINESS PROBLEM SOLVING CASE Walmart Versus Amazon and the Future of Retail Walmart is the world's largest and most success For online shopping. Amazon has some clear-cut ful retailer, with more than $485 billion in 2016 advantages. Amazon has created a recognizable sales and nearly 11.700 stores worldwide, including and highly successful brand in online retailing. The more than 4.600 in the United States, Walmart has company has developed extensive warehousing facili 2.3 million employees and ranks number one on the ties and an extremely efficient distribution network Fortune 500 list of companies, Walmart had such specifically designed for web shopping. Its premium a large and powerful selling machine that it really shipping service. Amazon Prime, provides fast "free" didn't have any serious competitors until now. two-day shipping at an affordable fixed annual sub- Today Walmart's greatest threat is Amazon.com. scription price 1999 per year), often considered to be a often called the "Walmart of the Web." Amazon sells weak point for online retailers. According to the wall not only books but just about everything else people Street Journal Amazon's shipping costs are lower than want to buy DVDs, video and music streaming Walnuts ranging from 3 to 54 per package, while downloads, software, video mes, electronics Walmarts online shipping can run 55 to S7 per parcel apparel, furniture, food, toys, and jewelry. The com. Shipping costs can make a big difference for a store like pany also produces consumer electronics notably Walmart where popular purchases tend to be low-cost the Amazon Kindle e-book reader, Fire tablet. Echo items like S10 packs of underwear. It makes no sense and Tap speakers, and Fire TV streaming media for Walmart to create a duplicate supply chain for player. No other online retailer can match Amazon's c-commerce breadth of selection, low prices, and fast, reliable However, Walmart is no pushover. It is an even larger shipping. For many years. Amazon has been the and more recognizable retail brand than Amazon world's largest e-commerce retailer with the world's Consumers associate Walmart with the lowest price. largest and most powerful online selling machine which Walmart has the flexibility to offer on any given Moreover, Amazon has changed the habits and item because of its size. The company can lose money expectations of consumers in ways to which Walmart selling a hot product at extremely low margins and and other retailers must adapt. According to Brian expect to make money on the strength of the large Yarbrough a retail analyst at Edward Jones in quantities of other items it sells Walmart also has a St. Louis. Amazon and online retailing is probably significant physical presence, and its stores provide the biggest disrupter of retail since Walmart itself the instant gratification of shopping, buying an item. Walmart was founded as a traditional Mine plysis and taking it home immediately as opposed to waiting cal store in 1962, and that's still what it does best. But when ordering from Amazon. Seventy percent of the it is being forced to compete in ecommerce as well U.S. population is within five miles of a Walmart store, Eight years ago, only one-fourth of all Walmart cus according to company management, tomers shopped Amazon.com.according to data Walmart bus steadily increased its investment in from researcher Kantar Retail. Today, however, half its online business, spending between 1.2 billion and or Walmart customers say they've shopped at both SI.5 billion annually in 2015 and the next few years retailers Online competition and the profits to be on e-commerce. This includes fulfillment centers and reaped from e-commerce have become too important technology and purchases such as 53 billion for Ict.com to ignore, Walmar's traditional customers who are pri to secure expertise for delivering the lowest-cost basket of goods online, Walmart.com is now the second- marily bargain hunters making less than $50,000 most visited e-commerce site in the United States with per year are becoming more comfortable using technology. More affluent customers who started 88 million unique visitors per month Walmart has shopping at Walmart during the recession are return computing centers, which provides the computing constructed one of the world's largest private cloud ing to Amazon as their finances improve Anticon has started stocking merchandise categories that horsepower for Walmart to increase the number of Walmart traditionally sold, such as vacuum bugs, items available for sale on Walmart.com From 1 million diapers, and apparel and its revenue is growing much spring of 2015 the company opened four new fulfill- three years ago to more than 50 million today. In the faster than Walmart in 2016. Amazon had sales of ment centers around the country, cuch of which is more Deurly S136 billion than 1 million square feel. To lurther counter Amazon. 09 Our Achieving Competitive dentage with Wormation to Walmart introduced its own free two-day shipping pro- phones for home delivery, through in-store pickup, or gram for orders totaling more than 535 by wandering down the aisles of a Walmart superstore New technology will also give Walmart more exper Walmart is aiming to be the world's biggest omnichan tise in improving the product recommendations for nel retailer web visitors to Walmart.com, using smartphones as Amazon is working on expanding its selection of a marketing channel, and personalizing the shopping poods to be as exhaustive as Walmart. Amazon has experience. Walmart has been steadily adding new allowed third-party sellers to sell goods through its applications to its mobile and online shopping channels website for a number of years, and it has dramatically and is expanding its integration with social networks expanded product selection via acquisitions such as its such as Pinterest. 2009 purchase of online shoe shopping site Zappos.com More than half of Walmart customers can smart- to give the company an edge in footwear. Amazon phones Walmart has designed its mobile app to maxi- has been building its grocery offerings, with Amazon mize Walmart advantage over Amazon: its physical Primo. Prime Now, Prime Pantry, and Amazon Fresh locations. About 140 million people visita Walmart offering delivery times as short as an hour in some store eich week. The apps Walmart Pay feature Cases enables users to quickly, easily and securely pay with It looks like Amazon is trying to innovate in physical their smartphones in all Walmart stores. Users link a retail store sales as well as online. Amazon has opened credit card or bank account to the app. At checkout. retail bookstores in Seattle, Chico San Diego, and they can just scan the phone to pay rather than pulling other US locations featuring Amaron clectronic out their wallets. The app can also store shopping lists. devices as well as books. It is thinking about moving sive wish lists, and arringe online orders. About into the grocery business as well as retail stores for 22 million people now use the app as they shop furniture and appliances. These are retail experiences The Walmart website uses software to monitor prices tu lend themselves less easily to online purchasing at competing retailers in real time and lower its online because customers like to see and feel these types of prices if necessary. The company is also doubling poods in person. Amazon set up a physical grocery inventory sold from third-party retailers in its online store in downtown Seattle called Amazon Go that is marketplace and tracking patterns in search and social designed around an app that is able to place the items media data to help it select more trendy products. This customers buy in a digital shopping cart so they can strikes directly at Amazon's third-party marketplace Icave the store without waiting in a checkoutline. The which accounts for a significant revenue stream for system automatically charges the credit card linked to Amazon. Additionally, Walmart is expanding its online the customer's Amazon account and even knows when offerings to include upscale items like $146 Nike sun- that person puts something back. glasses and wine refrigerators costing more than $2.500 Amazon continues to build more fulfillment centers to attract customers who never set foot in a Walmart closer lo urban centers and expand its same-day deliv- store. A new Product Content Collection System will ery services, and it has a supply chain optimized for facilitate vendors sending their product catalogs to online commerce that Walmart just can't match. It now Walmart, and the product information will then be has more than 100 warehouses from which to pack- available online utge and ship goods, Warehouses speed up Amazon's Walmart's commitment to e-commerce is not shipping.encouraging users to shop more at Amazon. designed to replicate Amazon's business model. and the cost of these centers as a portion of Amazon's Instead. CEO Doug McMillon is crafting a strategy operations is decreasing. Amazon is building up its that gives consumers the best of both worlds what own delivery operation to compete with UPS, FedEx. is called an omnichannel approach to retailing and the U.S. Postal Service by offering better delivery Walmartsmunagement believes the company's advan- and lower costs for both its own customers and possibly tage is that it is not a pure play c-commerce retailer those of other retailers. Both Amazon and Walmart and that customers want some real interaction with are experimenting with drones to accelerate fulfillment physical stores as well as digital. Walmart will sell vig. and delivery. But Walmart has thousands of stores, one orously through the web and also in its plysical stores, retaining its hallmark everyday low prices and wide in almost every neighborhood, which Amazon won't ever be able to replicate product assortment in both channels and using its large The winner of this epic struggle will be the company network of stores as distribution points Walmart will that leverages its advantipe better. Walmart's technol- closely integrite online shopping and fulfillment with ogy initiative looks promising, but it still has work its physical stores so that customers can shop how. to do before its local stores are anything more than cver they want whether it's ordering on their mobile local stores. Can Walmart successfully move to un omnichannel strategy? Can Amazon business model work for physical retail store sales! Which giant will dominate future retailing? 1. Based on the case description about Amazon, please identify five forces "who they are" and analyze the role of IT" as to how it contributes to increase the competitiveness of the company (1 point). Who & Status Role of IT Rivalry Potential Entrant Customer Supplier Substitute BUSINESS PROBLEM SOLVING CASE Walmart Versus Amazon and the Future of Retail Walmart is the world's largest and most success For online shopping. Amazon has some clear-cut ful retailer, with more than $485 billion in 2016 advantages. Amazon has created a recognizable sales and nearly 11.700 stores worldwide, including and highly successful brand in online retailing. The more than 4.600 in the United States, Walmart has company has developed extensive warehousing facili 2.3 million employees and ranks number one on the ties and an extremely efficient distribution network Fortune 500 list of companies, Walmart had such specifically designed for web shopping. Its premium a large and powerful selling machine that it really shipping service. Amazon Prime, provides fast "free" didn't have any serious competitors until now. two-day shipping at an affordable fixed annual sub- Today Walmart's greatest threat is Amazon.com. scription price 1999 per year), often considered to be a often called the "Walmart of the Web." Amazon sells weak point for online retailers. According to the wall not only books but just about everything else people Street Journal Amazon's shipping costs are lower than want to buy DVDs, video and music streaming Walnuts ranging from 3 to 54 per package, while downloads, software, video mes, electronics Walmarts online shipping can run 55 to S7 per parcel apparel, furniture, food, toys, and jewelry. The com. Shipping costs can make a big difference for a store like pany also produces consumer electronics notably Walmart where popular purchases tend to be low-cost the Amazon Kindle e-book reader, Fire tablet. Echo items like S10 packs of underwear. It makes no sense and Tap speakers, and Fire TV streaming media for Walmart to create a duplicate supply chain for player. No other online retailer can match Amazon's c-commerce breadth of selection, low prices, and fast, reliable However, Walmart is no pushover. It is an even larger shipping. For many years. Amazon has been the and more recognizable retail brand than Amazon world's largest e-commerce retailer with the world's Consumers associate Walmart with the lowest price. largest and most powerful online selling machine which Walmart has the flexibility to offer on any given Moreover, Amazon has changed the habits and item because of its size. The company can lose money expectations of consumers in ways to which Walmart selling a hot product at extremely low margins and and other retailers must adapt. According to Brian expect to make money on the strength of the large Yarbrough a retail analyst at Edward Jones in quantities of other items it sells Walmart also has a St. Louis. Amazon and online retailing is probably significant physical presence, and its stores provide the biggest disrupter of retail since Walmart itself the instant gratification of shopping, buying an item. Walmart was founded as a traditional Mine plysis and taking it home immediately as opposed to waiting cal store in 1962, and that's still what it does best. But when ordering from Amazon. Seventy percent of the it is being forced to compete in ecommerce as well U.S. population is within five miles of a Walmart store, Eight years ago, only one-fourth of all Walmart cus according to company management, tomers shopped Amazon.com.according to data Walmart bus steadily increased its investment in from researcher Kantar Retail. Today, however, half its online business, spending between 1.2 billion and or Walmart customers say they've shopped at both SI.5 billion annually in 2015 and the next few years retailers Online competition and the profits to be on e-commerce. This includes fulfillment centers and reaped from e-commerce have become too important technology and purchases such as 53 billion for Ict.com to ignore, Walmar's traditional customers who are pri to secure expertise for delivering the lowest-cost basket of goods online, Walmart.com is now the second- marily bargain hunters making less than $50,000 most visited e-commerce site in the United States with per year are becoming more comfortable using technology. More affluent customers who started 88 million unique visitors per month Walmart has shopping at Walmart during the recession are return computing centers, which provides the computing constructed one of the world's largest private cloud ing to Amazon as their finances improve Anticon has started stocking merchandise categories that horsepower for Walmart to increase the number of Walmart traditionally sold, such as vacuum bugs, items available for sale on Walmart.com From 1 million diapers, and apparel and its revenue is growing much spring of 2015 the company opened four new fulfill- three years ago to more than 50 million today. In the faster than Walmart in 2016. Amazon had sales of ment centers around the country, cuch of which is more Deurly S136 billion than 1 million square feel. To lurther counter Amazon. 09 Our Achieving Competitive dentage with Wormation to Walmart introduced its own free two-day shipping pro- phones for home delivery, through in-store pickup, or gram for orders totaling more than 535 by wandering down the aisles of a Walmart superstore New technology will also give Walmart more exper Walmart is aiming to be the world's biggest omnichan tise in improving the product recommendations for nel retailer web visitors to Walmart.com, using smartphones as Amazon is working on expanding its selection of a marketing channel, and personalizing the shopping poods to be as exhaustive as Walmart. Amazon has experience. Walmart has been steadily adding new allowed third-party sellers to sell goods through its applications to its mobile and online shopping channels website for a number of years, and it has dramatically and is expanding its integration with social networks expanded product selection via acquisitions such as its such as Pinterest. 2009 purchase of online shoe shopping site Zappos.com More than half of Walmart customers can smart- to give the company an edge in footwear. Amazon phones Walmart has designed its mobile app to maxi- has been building its grocery offerings, with Amazon mize Walmart advantage over Amazon: its physical Primo. Prime Now, Prime Pantry, and Amazon Fresh locations. About 140 million people visita Walmart offering delivery times as short as an hour in some store eich week. The apps Walmart Pay feature Cases enables users to quickly, easily and securely pay with It looks like Amazon is trying to innovate in physical their smartphones in all Walmart stores. Users link a retail store sales as well as online. Amazon has opened credit card or bank account to the app. At checkout. retail bookstores in Seattle, Chico San Diego, and they can just scan the phone to pay rather than pulling other US locations featuring Amaron clectronic out their wallets. The app can also store shopping lists. devices as well as books. It is thinking about moving sive wish lists, and arringe online orders. About into the grocery business as well as retail stores for 22 million people now use the app as they shop furniture and appliances. These are retail experiences The Walmart website uses software to monitor prices tu lend themselves less easily to online purchasing at competing retailers in real time and lower its online because customers like to see and feel these types of prices if necessary. The company is also doubling poods in person. Amazon set up a physical grocery inventory sold from third-party retailers in its online store in downtown Seattle called Amazon Go that is marketplace and tracking patterns in search and social designed around an app that is able to place the items media data to help it select more trendy products. This customers buy in a digital shopping cart so they can strikes directly at Amazon's third-party marketplace Icave the store without waiting in a checkoutline. The which accounts for a significant revenue stream for system automatically charges the credit card linked to Amazon. Additionally, Walmart is expanding its online the customer's Amazon account and even knows when offerings to include upscale items like $146 Nike sun- that person puts something back. glasses and wine refrigerators costing more than $2.500 Amazon continues to build more fulfillment centers to attract customers who never set foot in a Walmart closer lo urban centers and expand its same-day deliv- store. A new Product Content Collection System will ery services, and it has a supply chain optimized for facilitate vendors sending their product catalogs to online commerce that Walmart just can't match. It now Walmart, and the product information will then be has more than 100 warehouses from which to pack- available online utge and ship goods, Warehouses speed up Amazon's Walmart's commitment to e-commerce is not shipping.encouraging users to shop more at Amazon. designed to replicate Amazon's business model. and the cost of these centers as a portion of Amazon's Instead. CEO Doug McMillon is crafting a strategy operations is decreasing. Amazon is building up its that gives consumers the best of both worlds what own delivery operation to compete with UPS, FedEx. is called an omnichannel approach to retailing and the U.S. Postal Service by offering better delivery Walmartsmunagement believes the company's advan- and lower costs for both its own customers and possibly tage is that it is not a pure play c-commerce retailer those of other retailers. Both Amazon and Walmart and that customers want some real interaction with are experimenting with drones to accelerate fulfillment physical stores as well as digital. Walmart will sell vig. and delivery. But Walmart has thousands of stores, one orously through the web and also in its plysical stores, retaining its hallmark everyday low prices and wide in almost every neighborhood, which Amazon won't ever be able to replicate product assortment in both channels and using its large The winner of this epic struggle will be the company network of stores as distribution points Walmart will that leverages its advantipe better. Walmart's technol- closely integrite online shopping and fulfillment with ogy initiative looks promising, but it still has work its physical stores so that customers can shop how. to do before its local stores are anything more than cver they want whether it's ordering on their mobile local stores. Can Walmart successfully move to un omnichannel strategy? Can Amazon business model work for physical retail store sales! Which giant will dominate future retailing