Will Walmart beat-up on Amazon with physical Locations?

A company that is always on the defensive, loses customers to the innovator. Do this enough, and you are a shell of the giant you once were, and your stock price follows. With Walmart and Best Buy losing sales and customers to Amazon, they have recently invested a lot of money to bolster their online divisions. (especially Walmart) 

So, who is destined to be the winner? Let's take a look at the scorecard right now. 

1. Online experience-  Amazon right now has the advantage over Walmart given the superior design of their website and much better search engine. 
However, with the amount of money Walmart has been putting into its online operations, I expect this lead to narrow pretty quickly. 
2. Shipments: Amazon Prime shipping is just fine for me, I rarely need anything outside of groceries quickly. In fact, using Prime is way better than Walmart whose orders arrive anywhere from the next day to a week after my purchase.  
3. Infrastructure: Using local distribution centers will certainly narrow the superiority of Amazon Prime shipping. Amazon sees this as a threat, and is investing so heavily into their own infrastructure. 
Walmart has a massive lead by default of being in business for 50 years, which it should exploit. Local distribution centers makes same day delivery a real possibility for urban areas, which most consumers (though not me so much) would put a high value on. 

Bottom line: The point is that Walmart, if it can get the customer experience right, has the infrastructure to create real havoc for Amazon which until now, it hasn't utilized. The point of this exercise is to examine ways that long standing companies can use their massive size and longevity, to adapt to a digital world. 

This is why it is so dangerous to pay massive valuations for Amazon stock (just about any stock), because it under appreciates the danger of competitors catching up/ utilizing their own advantages. That's the real lesson here. The higher the P/E (granted with Amazon they could easily retain more earnings but continually reinvest profits) the more a company is priced for perfection which in a hyper competitive capitalistic world, it's difficult to bring that business plan to fruition without a hitch. 


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