Walmart Fends Off Amazon by Playing to Its Strengths
Summary
When Amazon announced recently it was working to go to one-day shipping as the standard for its Prime program, Walmart essentially revealed in a tweet the following day that it was soon to launch something similar. That looks good next to Amazons announcement that its shift to one-day Prime shipping would cost $800 million in the current quarter - and is likely a relief to investors who have been understandably skittish about how much Walmarts operating margins have shrunk in recent years. Despite all this good news, I stand by my warning earlier this week that all retailers, Walmart included, should be seriously worried about the potential consequences of the escalating trade war. And if US shoppers eventually start to feel the squeeze of higher costs for all sorts of consumer goods, Walmarts reputation as a place with rock-bottom prices should serve it well. Furthermore, Walmarts massive investment in Flipkart, an Indian e-commerce player, creates a near-term drag on profit and is a bet on a market that has huge potential, but loads of challenges, including regulatory ones.