Are we going to witness a head-on clash of the two titans in the coming years? It is interesting to see Walmart buying online retailers and Amazon buying brick and mortar retail chain and in the process each becoming more similar to the other. But in my view Amazon has a big advantage over Walmart – Jeff Bezos.
But Wind thinks Walmart’s tactics are “a little confusing and a little late” as it tries to catch up with online merchants. However, he notes that with its scale and track record of success, the discounter will eventually become digitally savvy even if it takes longer than expected. Meanwhile, Amazon could bungle the integration of Whole Foods by making changes too quickly and not paying enough heed to cultural differences, Dahlhoff says. Adds Lodish: “I’m not sure how much experience Amazon has in running a big operation like Whole Foods that’s got a lot of logistics that are not in warehouses but are on shelves.”
At least, Amazon can afford the $13.7 billion price tag for Whole Foods — last year’s free cash flow alone was $9.7 billion. And Wall Street will likely give Amazon some room to run because it has a proven business model and an innovative and aggressive CEO. “The market has been giving Jeff Bezos a lot of room to do what he feels is in the long-term best interest [of the company] and they’re not punishing him if he has short-term uses for his capital that don’t go to the bottom line right away,” Lodish says.