Wal-Mart has the downside that you have to go to Wal-Mart though. I don't just mean that in the dismissive sense that their stores are unpleasant (which they are), but there's a fundamental mismatch between an urbanizing population and a big box store in the suburbs that everyone has to drive to and lose their car in a massive parking lot.
In fact, Sam Walton knew this. His mission wasn't to dominate the world of retail, it was to bring the same economies of scale urban retail already had to rural communities.
Keep in mind that physical storefronts have costs too. Wal-Mart has warehouses too, and they're probably simpler, but when all you have is warehouses, there's a lot of complexity you can add and still have a simpler, more cost-effective model than employing battalions of people to operate cash registers and stock shelves in thousands of small towns and suburbs across the country.
there's a fundamental mismatch between an urbanizing population and a big box store in the suburbs that everyone has to drive to and lose their car in a massive parking lot.
There are Wal-Marts all over big cities, though. Public transit takes you to them.
Amazon's new service is more expensive than public transit. Also, you also don't get any exercise when using it, whereas many people like going out for a walk. That's a minor point though.
It's probably more accurate to say "There's a mismatch between Wal-Mart and San Francisco." Possibly cultural.
The nearest Walmarts to Seattle are in Renton and Bellevue. The nearest Walmarts to New York are either in New Jersey or upstate. There are Walmart "Neighborhood Markets" in Chicago, but the big box stores that they famously scale with are in the suburbs. There seems to be a Wal-Mart in LA, but not downtown, rather in the area that seems like a bunch of suburbs concatenated together. There are a few in Houston, mainly in the suburbs that were annexed to the city but there's at least one inside the 610 loop. (Having been to Houston, it is also largely a series of suburbs concatenated together.) Those are the four largest cities in the US.
By and large Walmart is a suburban phenomenon. They're trying to move into the cities because they don't have anywhere else to expand, but the assumptions underlying big box stores aren't going to hold up in that environment and they're going to become just another brick-and-mortar retailer, with all the costs that entails.
Hm, it looks like you're right. I should live in those places before talking about them.
It just seemed odd to say that Amazon has an advantage where Wal-Mart doesn't. The announcement says Amazon is offering the service in Manhattan, but there's a Wal-Mart supercenter just 30 minutes away: http://i.imgur.com/oHS2h43.png
Do you feel Amazon can make good headway in dense city areas? It seems like if Wal-Mart can't figure out how to organize distribution pipelines in a given area, then Amazon wouldn't be able to, either. So I was just trying to figure out what critical advantage Amazon might have.
Wal-Mart has B&M locations that you travel to (and if you've seen a sitcom in the last 30 years you know that "just go to New Jersey" isn't a popular solution for New Yorkers). Amazon ships the stuff to you. Now they do it in an hour, if you're in New York. That's as long as it would take to get to Walmart and back, except you can continue living your normal life instead of driving to New Jersey.
(Also, New Yorkers don't drive. So that Wal-Mart in New Jersey is closer to an hour away by transit.)
> I don't just mean that in the dismissive sense that their stores are unpleasant (which they are)
They once were, but I've noticed a marked improvement lately. The newly opened Walmart locally is very nice, clean, and well lit. The local grocery is a dump in comparison[1].
1) no, I don't have this home town sympathy for the local grocery store since it did some bad things in the past that makes Walmart look like a saint in comparison.
In fact, Sam Walton knew this. His mission wasn't to dominate the world of retail, it was to bring the same economies of scale urban retail already had to rural communities.
Keep in mind that physical storefronts have costs too. Wal-Mart has warehouses too, and they're probably simpler, but when all you have is warehouses, there's a lot of complexity you can add and still have a simpler, more cost-effective model than employing battalions of people to operate cash registers and stock shelves in thousands of small towns and suburbs across the country.