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This Is Why Amazon and Walmart Are Winning Retail

By Daniel B. Kline - Updated Jan 18, 2020 at 3:38PM

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Consumers want one thing above all others, and only a few retailers are offering it. (AMZN 0.19%) has made online shopping incredibly easy. For its Prime customers, it takes only a few clicks to make a purchase that will arrive at their home in about a day in most cases. The company has also innovated in its Amazon Go retail stores, where consumers can pay for purchases automatically without having to stand in a checkout line.

Walmart (WMT -2.74%) has developed similar efforts to remove pain points for its customers. It has added curbside pickup and in-store kiosks to make picking up orders placed online easier, and it has dramatically improved its shipping of online orders.

These efforts are from two retailers giving people what they want. More than eight in 10 consumers -- 83% -- said "convenience while shopping is more important to them now compared with five years ago," according to the National Retail Federation's (NRF) Winter Consumer View report.

A woman operates a Walmart in-store pickup kiosk.

Walmart has innovated when it comes to picking up orders made online. Image source: Walmart.

Give the people what they want

"Time is a precious commodity for today's consumers," said Mark Mathews, NRF's vice president for research development and industry analysis. "Shoppers are busier with commuting to work, dealing with family obligations, or catching up on schoolwork, among other things. Naturally, convenience factors are playing a larger role in their shopping experience."

It's not that price and the quality of the items doesn't matter. About a third of survey respondents named price and a similar amount cited quality of the item as "what matters most" when they shop. That outpaces the 13% who said "most convenient option."

When you go a little deeper, however, you see that convenience matters. Nearly all of the survey respondents -- 97% -- said they "have backed out of a purchase because it was inconvenient for them."

Consumers have shown a willingness to pay for convenience, especially when it comes to online shopping. Two-thirds of those surveyed -- 66% -- said they pay for at least one shipping service, such as Amazon Prime, Target-owned Shipt, or Instacart, while 25% admitted they paid for more than one.

Retailers need multiple answers

Walmart and Amazon lead the retail world in convenience because both companies have pursued multiple solutions. Both have invested in their supply chains, and both have shortened the delivery window for customers.

Amazon has set a new standard by offering one-day delivery for Prime members on tens of millions of items. Walmart hasn't met that standard on a widespread basis, but it has made it very easy for customers to order online and pick up in-store -- sometimes without even leaving your car.

Both retailers have invested in non-stop improvement. Both offer same-day delivery on groceries and a limited selection of items, and both continue to look for new ways to make shopping easier for consumers.

"While convenience continues to grow in importance for consumers, there is not a one-size-fits-all solution," Mathews said. "As the industry evolves, retailers will look to identify additional ways to save consumers time and effort."

Walmart and Amazon both clearly understand what consumers want. They also know that convenience is an ever-rising bar. People did not know they wanted one-day shipping when two-day was the standard. Once Amazon offered it, though, that quickly became a new standard.

Both of these retailers understand that it's important to continue investing heavily in convenience. That could mean self-driving vehicles, drones, and concepts most consumers aren't even considering right now. Doing this will keep both of these retailers ahead of the competition and make them smart bets for smart investors

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