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"Narratives and storytelling in business really, really matter. You need to have a good business, but storytelling and narratives could take you over the top." — Jason Del Rey, Journalist and Author
So much of modern ecommerce competition is shaped by the actions of Walmart and Amazon. One dominated physical retail for decades before making a rocky but generally successful expansion into ecommerce. The other is nearly synonymous with digital retail and is now trying to iron out its brick-and-mortar strategy.
The question of which will ultimately command the most market share is the subject of the book "Winner Sells All: Amazon, Walmart, and the Battle for Our Wallets," by Jason Del Rey.
Del Rey recently joined the "Unpacking the Digital Shelf" podcast to discuss what he discovered through his exhaustive journalism.
While there’s no clear answer as to who will win the battle for consumer wallets, Del Rey did uncover a few clear lessons about how brands and retailers can navigate the complex and omnichannel retail world that Walmart and Amazon are both shaping and being shaped by.
One of the critical lessons Del Rey shared is the importance of a strong narrative for retail success.
"Narratives and storytelling in business really, really matter," Del Rey says. "You need to have a good business, but storytelling and narratives could take you over the top."
To illustrate his point, Del Rey explained how the legacy of Marc Lore, who was in charge of building Walmart’s ecommerce business from 2016 to 2021, is closely tied to the narratives told about Walmart today.
"If your definition [of success] is changing the narrative of Walmart so it's not considered a digital laggard anymore … I think his tenure was very successful, and he was very good at telling a story of digital transformation," Del Rey says.
Lore’s storytelling skills are helping boost his reputation and that of Walmart’s. However, if you picked apart his decision-making and initiatives, the grade you'd give him and his team is maybe not as kind, according to Del Rey.
Walmart has also shown skill at controlling its narrative by responding to criticisms leveled at the company over the years.
"Walmart under Lee Scott in the mid-aughts went on a little bit of a listening tour with critics and … met with a lot of environmental orgs, some labor groups, [and] critical journalists," Del Rey recounts. "Doesn't mean they agreed, doesn't mean it wasn't at least partly, or maybe even mostly, about perception. But they acknowledged there were areas they needed to improve."
By contrast, Del Rey says he was struck by the "straight-up disdain [Amazon] showed for critics, and just a lack of self-awareness." This disdain is a contributing factor to why Amazon is "the new enemy number one in some circles."
At the moment, Amazon is big enough and has enough general popularity to weather some criticism. If it continues to ignore the narrative surrounding it, however, there’s no guarantee this will remain true.
At the risk of stating the obvious, another essential lesson Del Rey shared is that "the incentives you set up in your business really matter."
He uses the growth of Walmart’s digital business to illustrate this, saying, "What we saw for a long time was the traditional core, mature, successful business had incentives that were mainly about profitability and keeping the execution tight. And Marc Lore comes in with his team in 2016."
From there, Del Rey says Lore set out to improve ecommerce competition and insisted on aligning incentives across traditional and digital retail to do so.
"And so for the brief period of time after … John Furner took over [as CEO of Walmart U.S.] … they changed the bonus structure of the two executives so that they were more aligned," Del Rey says.
With this adjusted bonus structure, Walmart had the top-down push it needed to meet its ecommerce goals.
At Amazon, incentives tend to promote taking innovative risks. Podcast host Rob Gonzalez recounts Jeff Bezos’ stating his philosophy that if Amazon is "not making mistakes commensurate to the scale of our business, then we're just not trying hard enough."
Gonzalez applies that philosophy to the company’s recent forays into opening physical stores and acquiring Whole Foods, both of which could arguably be considered mistakes. The attitude that drove these risky moves was born of a culture where "a well-executed mistake can further your career," in Gonzalez’s words.
The company is currently big enough that it can take these losses in stride and learn from its mistakes. Whether its incentives toward risk-taking will continue to be a boon in the long term remains to be seen, but what’s clear is that these incentives define how the company operates and grows.
In one final illustration of how incentives impact a business, Del Rey shares how the Amazon bookstores’ incentives actually contributed to their failure.
"The incentives for bookstore employees were not what you might think when you hear [of] a bookstore," Del Rey says. "It was not necessarily to sell more books; it was to sell gadgets and to sign people up to digital Amazon subscriptions."
The lesson from this, according to Del Rey, is that if you’re entering new channels or new industries and your foremost goal isn’t serving the customer need at that moment, you could run into trouble.
"As you're entering new channels or new industries, if your main goal is … not first and foremost serving the customer need in that moment, you could run into trouble." — Jason Del Rey, Journalist and Author
So, which giant retailer has the incentives that will help them win in an omnichannel world? It’s impossible to answer that question definitively, but Del Rey examines the factors that will determine how things play out.
At Amazon, a key theme is whether it will be able to capture omnichannel dollars through brick-and-mortar retail.
"I do think they absolutely need to have a scaled business in the physical world … if they want to really give consumers every option they want in an omnichannel world today," he says. "If they want to hit that vision of really … providing customers anything they want to shop for, including grocery and consumables … [that] does not happen if they don't figure out physical retail."
Omnichannel capabilities are of primary concern at Walmart, too, but this time the question is whether the company will be able to continue growing its digital business.
Del Rey quotes an interview he had with Dough McMillan, CEO of Walmart, in which McMillan said, "Personally, I'm not a risk-taker … But if we're going to exist 20 years from now, we need to take big risks." As successful as Walmart is, it won’t continue to beat its ecommerce competition if it becomes more of a risk-taker like Amazon.
Several other factors are also in play, including leadership — notably the beginning of Andy Jassy’s tenure as Amazon’s CEO.
The companies are also exploring avenues into new markets like healthcare. These factors and more will shape the successes they have over the years, and brands and retailers can only wait and see how they will continue to adapt as omnichannel retail evolves.
Which retail giant ultimately wins the battle for our wallets will come down to their ability to align their narratives, incentives, and omnichannel capabilities with what consumers want.
Regardless of who wins, the brands and retailers navigating a world of ecommerce competition dominated by these companies can learn from their successes, their struggles, and how they have measured success over the years.
For more on the inner workings of Walmart and Amazon, listen to the full podcast episode.
