WMT - Walmart Inc

[vinod1]

 

Walmart has not really focused on Online so far and their current efforts so far have been subpar.

 

My question is, what competitive advantage does Amazon have when it builds its distribution centers - automated with robots as they might be, why would Walmart not be able to build them if it deems them necessary? Is there anything that Amazon does in these distribution centers that Walmart would not be able to copy? They certainly can afford it and the Walton family with 50% stake would certainly be understanding if short term results need to take a back seat to protect long term viability.

 

Vinod

 

Vinod,

 

Here is something to think about,

WMT's distribution centers are/were their competitive advantage with respect to other retailers. The era they have grown in and the model they followed caused them to strategically locate their distribution centers such that they could most efficiently service their customers (the big box retail stores around them). It was perfect as long as customers went to the store to shop.

 

Enter Amzn - their distribution centers (called fulfillment centers) were built and located strategically in this era. They located them such that they could efficiently service their customers (not retail stores but direct customers).

 

The location of distribution centers is key in retail as it influences what inventory you carry, how much you carry and by when you can restock if necessary. Your suppliers are plugged into these systems and for both WMT and AMZN it works perfectly given their model.

 

Now if WMT has to replicate AMZN locations, it would clearly be very expensive. Not only that, it would be disruptive to their existing business model with suppliers- it is a classic problem incumbents face in business. That is also why you see an effort from WMT to use their retail locations as part distribution centers for their online model.(pick up from store model)

 

They will have to do something like MSFT did - scrap the old unwieldy internet explorer and build a totally new browser for the new gen. This is difficult to do, but certainly possible. It would take a lot of investment and patience from investors.

 

My difficulty with WMT is - do you think the current management is not entrenched enough to overhaul the internet strategy? I would think you need new blood to come in to make such big changes (again like MSFT)

 

rpadebet,

 

I do understand the key role of distribution centers and its historical importance in Walmart's growth and competitive advantage. But that is only part of the story. It has also cut a lot of waste in the whole distribution system.

 

Retailers have historically added a multitude of additional costs and charged these to suppliers. These take the form of display fees, rebates, handling charges, damage allowances, etc. These additional costs have been passed on to the consumers and the resulting revenue allowed retailers to ignore inefficient processes. Walmart has a one price policy that cuts all incentives for wastage in the supply chain. Walmart partners with its suppliers to cut out many inefficiencies in this process - this is an ongoing cycle. Sort of like say 3G.

 

Walmart already has relationships with suppliers and  their business processes are intertwined to reduce costs. Granted this is optimized for brick and mortar. But it does have scale and it is frequently the largest buyer of many of these suppliers so it gives them a leg up over competitors when it needs them to make changes.

 

Why is Walmart disadvantaged in building separate fulfillment centers to ship directly to customers if the economics made sense rather than using its stores? How is this going to be disruptive to suppliers? They would just ship both to existing warehouses and to these new warehouses (fulfillment centers) as well.

 

It is using current B&M stores as it might be cost effective/competitive for all we know.

 

If it makes sense to use fulfillment centers and they confer some competitive advantage to those using them, what would stop Walmart from building them? I am trying to understand if Amazon has some real advantages in building these that Walmart might not be able to replicate? Expensive is not really an issue with Walmart's resources.

 

They seem to be now focusing on eCommerce finally as they seem to have woken up to the risk from Amazon.

 

Vinod

[Guest Schwab711]

AMZN receives a fairly large hidden subsidy from Congress through USPS, which delivers packages at a loss. If Congress allowed USPS to operate completely independently then prices for shipping would go up and AMZN would lose quite a bit of their advantage. USPS shipping prices are generally much lower than FedEx/UPS even though they have operating losses.

 

http://www.wsj.com/articles/u-s-mail-does-the-trick-for-fedex-ups-1407182247

 

It's not fair for tax payers to subsidize AMZN's business expenses.

[vinod1]

AMZN receives a fairly large hidden subsidy from Congress through USPS, which delivers packages at a loss. If Congress allowed USPS to operate completely independently then prices for shipping would go up and AMZN would lose quite a bit of their advantage. USPS shipping prices are generally much lower than FedEx/UPS even though they have operating losses.

 

http://www.wsj.com/articles/u-s-mail-does-the-trick-for-fedex-ups-1407182247

 

It's not fair for tax payers to subsidize AMZN's business expenses.

 

Is there anything that prohibits Walmart or other companies from using USPS as well?

 

Vinod

[Guest Schwab711]

AMZN receives a fairly large hidden subsidy from Congress through USPS, which delivers packages at a loss. If Congress allowed USPS to operate completely independently then prices for shipping would go up and AMZN would lose quite a bit of their advantage. USPS shipping prices are generally much lower than FedEx/UPS even though they have operating losses.

 

http://www.wsj.com/articles/u-s-mail-does-the-trick-for-fedex-ups-1407182247

 

It's not fair for tax payers to subsidize AMZN's business expenses.

 

Is there anything that prohibits Walmart or other companies from using USPS as well?

 

Vinod

 

There business is geared towards B&M. WMT is also taking advantage of this but 100% of AMZN's sales benefit from this.

[vinod1]

AMZN receives a fairly large hidden subsidy from Congress through USPS, which delivers packages at a loss. If Congress allowed USPS to operate completely independently then prices for shipping would go up and AMZN would lose quite a bit of their advantage. USPS shipping prices are generally much lower than FedEx/UPS even though they have operating losses.

 

http://www.wsj.com/articles/u-s-mail-does-the-trick-for-fedex-ups-1407182247

 

It's not fair for tax payers to subsidize AMZN's business expenses.

 

Is there anything that prohibits Walmart or other companies from using USPS as well?

 

Vinod

 

There business is geared towards B&M. WMT is also taking advantage of this but 100% of AMZN's sales benefit from this.

 

Thanks!

[rkbabang]

AMZN receives a fairly large hidden subsidy from Congress through USPS, which delivers packages at a loss. If Congress allowed USPS to operate completely independently then prices for shipping would go up and AMZN would lose quite a bit of their advantage. USPS shipping prices are generally much lower than FedEx/UPS even though they have operating losses.

 

http://www.wsj.com/articles/u-s-mail-does-the-trick-for-fedex-ups-1407182247

 

It's not fair for tax payers to subsidize AMZN's business expenses.

 

Is there anything that prohibits Walmart or other companies from using USPS as well?

 

Vinod

 

There business is geared towards B&M. WMT is also taking advantage of this but 100% of AMZN's sales benefit from this.

 

Some percentage certainly benifits, but it isn't 100%. I've been a prime member for a long time, 7 years I think, and I have packages coming to my house 3-6 times per week. I can count the times they have came by USPS rather than UPS on one hand.  Besides the two times I've received Sunday deliveries by USPS this year, I can't remember the last time an Amazon package wasn't shipped UPS to me. Maybe it is location dependent or something, but it is proof that Amazon isn't taking advantage of the subsidized shipping for 100% of their business.

[fareastwarriors]

Berkshire sold some Walmart during the quarter. I was hoping he added more. Maybe next quarter?

[ritrading]

AMZN receives a fairly large hidden subsidy from Congress through USPS, which delivers packages at a loss. If Congress allowed USPS to operate completely independently then prices for shipping would go up and AMZN would lose quite a bit of their advantage. USPS shipping prices are generally much lower than FedEx/UPS even though they have operating losses.

 

http://www.wsj.com/articles/u-s-mail-does-the-trick-for-fedex-ups-1407182247

 

It's not fair for tax payers to subsidize AMZN's business expenses.

 

Is there anything that prohibits Walmart or other companies from using USPS as well?

 

Vinod

 

There business is geared towards B&M. WMT is also taking advantage of this but 100% of AMZN's sales benefit from this.

 

Some percentage certainly benifits, but it isn't 100%. I've been a prime member for a long time, 7 years I think, and I have packages coming to my house 3-6 times per week. I can count the times they have came by USPS rather than UPS on one hand.  Besides the two times I've received Sunday deliveries by USPS this year, I can't remember the last time an Amazon package wasn't shipped UPS to me. Maybe it is location dependent or something, but it is proof that Amazon isn't taking advantage of the subsidized shipping for 100% of their business.

 

Just wanted to add that many packages are delivered using multiple carriers per package. I found this information in the Fedex and UPS 10-K's. FDX and UPS will often deliver to a USPS location. Then, USPS will deliver to the buyer. I made the conclusion that FDX and UPS are more efficient with moving big packages over longer distances, but USPS is more efficient in delivering packages within short distances. This makes sense since postal workers work the same route every day, so there's a sunk cost in having them visit all homes on any given day.

 

Also, I not sure if USPS if there is really a big subsidy for Amazon. USPS's mail segment is unprofitable, but their package segment is profitable. I suppose you could argue that their unprofitable mail segment makes their package segment more profitable.

[RadMan24]

Berkshire sold some Walmart during the quarter. I was hoping he added more. Maybe next quarter?

 

On CNBC said he sold to buy PCP. He also trimmed GS. So, he is just allocating capital.. Makes sense.

[Simple Investor]

I think the quarter looked good.  Same store comps continue to increase.  Obviously increased wages and costs impacting the bottom line. 

[plato1976]

I am thinking the only "customer" of those big boxes is walmart itself

so if walmart goes down in its retailer business who's going to rent those big boxes and hence what's the real value of these real estate?

 

I mentioned this to someone else but if WMT trades for 10x, they can start creating a REIT at a 5-6% cap rate versus the 10% earnings yield the stock trades for.  900mm square feet of real estate gives them a lot of protection.

 

Anyway who knows if they do it or not but those assets are real and you can unlock them if necessary.

[Picasso]

Ah older thread.

 

Just for fun and giggles

 

Oct 29th 2015 AMZN: $660 = 13%

Oct 29th 2015 WMT: $59 + $2 dividends = 20%

 

WMT shows pretty consistent SSS and homes around new WMT locations still go up in value, so I don't know if the WMT retailer going down the tubes scenario will happen that quickly.  I have a friend who signed a long-term lease with WMT at one of their "neighborhood" formats.  When he's prodded potential buyers of the property, it always ended up with interest at ultra low cap rates.  On par with a WBA or CVS store.

 

It's one of those weird things where the public market is maybe more fearful than the private markets.  I bet if you had a handful of solid properties leased out to WMT (suburbs that center around their stores), you wouldn't lose any sleep at night and bankers would be knocking at your door to lend against them to buy other properties.  But in the public market everyone is worried about giant AMZN blimps sending down drones packed with toilet paper and pampers. 

 

But to your point there might not be much other use to these WMT locations.  I haven't thought about it too much because there doesn't seem like a lot of money to be made here.

[bizaro86]

In fairness, your friend the landlord is higher in the capital structure than WMT equity holders. I don't think too many folks would argue WMT is going bankrupt, so a lease should almost certainly be money good.

 

If Amazon keeps taking share, a lot of other competitive retailers will go down first (Sears/kmart/jc penny etc) which would help Walmart as well.

[Picasso]

Right, I was referring to WMT forming some kind of REIT vehicle. Although I doubt it would ever happen.

[Guest longinvestor]

 

Walmart has not really focused on Online so far and their current efforts so far have been subpar.

 

My question is, what competitive advantage does Amazon have when it builds its distribution centers - automated with robots as they might be, why would Walmart not be able to build them if it deems them necessary? Is there anything that Amazon does in these distribution centers that Walmart would not be able to copy? They certainly can afford it and the Walton family with 50% stake would certainly be understanding if short term results need to take a back seat to protect long term viability.

 

Vinod

 

Vinod,

 

Here is something to think about,

WMT's distribution centers are/were their competitive advantage with respect to other retailers. The era they have grown in and the model they followed caused them to strategically locate their distribution centers such that they could most efficiently service their customers (the big box retail stores around them). It was perfect as long as customers went to the store to shop.

 

Enter Amzn - their distribution centers (called fulfillment centers) were built and located strategically in this era. They located them such that they could efficiently service their customers (not retail stores but direct customers).

 

The location of distribution centers is key in retail as it influences what inventory you carry, how much you carry and by when you can restock if necessary. Your suppliers are plugged into these systems and for both WMT and AMZN it works perfectly given their model.

 

Now if WMT has to replicate AMZN locations, it would clearly be very expensive. Not only that, it would be disruptive to their existing business model with suppliers- it is a classic problem incumbents face in business. That is also why you see an effort from WMT to use their retail locations as part distribution centers for their online model.(pick up from store model)

 

They will have to do something like MSFT did - scrap the old unwieldy internet explorer and build a totally new browser for the new gen. This is difficult to do, but certainly possible. It would take a lot of investment and patience from investors.

 

My difficulty with WMT is - do you think the current management is not entrenched enough to overhaul the internet strategy? I would think you need new blood to come in to make such big changes (again like MSFT)

 

rpadebet,

 

I do understand the key role of distribution centers and its historical importance in Walmart's growth and competitive advantage. But that is only part of the story. It has also cut a lot of waste in the whole distribution system.

 

Retailers have historically added a multitude of additional costs and charged these to suppliers. These take the form of display fees, rebates, handling charges, damage allowances, etc. These additional costs have been passed on to the consumers and the resulting revenue allowed retailers to ignore inefficient processes. Walmart has a one price policy that cuts all incentives for wastage in the supply chain. Walmart partners with its suppliers to cut out many inefficiencies in this process - this is an ongoing cycle. Sort of like say 3G.

 

Walmart already has relationships with suppliers and  their business processes are intertwined to reduce costs. Granted this is optimized for brick and mortar. But it does have scale and it is frequently the largest buyer of many of these suppliers so it gives them a leg up over competitors when it needs them to make changes.

 

Why is Walmart disadvantaged in building separate fulfillment centers to ship directly to customers if the economics made sense rather than using its stores? How is this going to be disruptive to suppliers? They would just ship both to existing warehouses and to these new warehouses (fulfillment centers) as well.

 

It is using current B&M stores as it might be cost effective/competitive for all we know.

 

If it makes sense to use fulfillment centers and they confer some competitive advantage to those using them, what would stop Walmart from building them? I am trying to understand if Amazon has some real advantages in building these that Walmart might not be able to replicate? Expensive is not really an issue with Walmart's resources.

 

They seem to be now focusing on eCommerce finally as they seem to have woken up to the risk from Amazon.

 

Vinod

 

Well here we are, 2 years later. Today I picked up my first grocery order-online-pickup-at store. First experience was very good. The ordering, pick up scheduling, notifying that I was there, loading the car by the Walmart attendant were all professional and no surprises.

 

The delighters,

 

- Literally no wait time. I had notified them on the phone 15 minutes before reaching and as I pulled up to the numbered space, they came out. 

- A mental barrier I (surely others have) had ordering online: Buying Bananas, tomatoes, bread and eggs. The m.o is that they show you these items before loading in the car. They apparently looked for the same things I would. They even mentioned that I could let them know if I wanted the bananas greener or riper.

- They substituted some items for larger or smaller sizes. Ex. 7.5 Oz Coke versus 12 Oz. They don't charge more. 4 items on my list were substituted and I got more than I paid for.

- I do not like paper or plastic (or worse, cardboard that comes with Amazon orders). This time I let them do plastic but they told me that they would fill up my own cloth bags the next time at the car and recycle the plastic they do use to transfer to the car. I am somewhat Ok with this, but would really like them to keep returnable bags/ containers and eliminate all plastic. "They are thinking about that". I sense they like that the lower overall costs is shared by both!

- $30 is all that's needed for this service to be free. This is a huge delighter for us as we plan to order more frequently than we do now. We do frequently throw away stuff from the fridge. Big cause for this is that we have too much in the fridge, some things get tucked away in the back. Freshness is very likely to go up in our kitchen. Cannot beat this value and this could well be a game changer.

 

- How this is all going to work is that, I will plan my pick up time while returning from work or some other planned travel(no incremental gas expense); I plan to fill up gas each time at Sam's club gas, which is in the parking lot. Sam's club gas is significantly cheaper than gas stations around me. Plus I get 5% off for using their credit.

 

Finally, the attendant was super nice. I asked him about tips and they do have a no tip policy. All they want is for me to spread the word:-) There is a $10 reward for referrals. ($10 each).

 

I like cheap and nobody beats Walmart for cheap. Cheap and convenient! I'm in. Will post any + or - experiences in the future.

 

Any one else try this?

 

 

 

 

[Parsad]

 

Walmart has not really focused on Online so far and their current efforts so far have been subpar.

 

My question is, what competitive advantage does Amazon have when it builds its distribution centers - automated with robots as they might be, why would Walmart not be able to build them if it deems them necessary? Is there anything that Amazon does in these distribution centers that Walmart would not be able to copy? They certainly can afford it and the Walton family with 50% stake would certainly be understanding if short term results need to take a back seat to protect long term viability.

 

Vinod

 

Vinod,

 

Here is something to think about,

WMT's distribution centers are/were their competitive advantage with respect to other retailers. The era they have grown in and the model they followed caused them to strategically locate their distribution centers such that they could most efficiently service their customers (the big box retail stores around them). It was perfect as long as customers went to the store to shop.

 

Enter Amzn - their distribution centers (called fulfillment centers) were built and located strategically in this era. They located them such that they could efficiently service their customers (not retail stores but direct customers).

 

The location of distribution centers is key in retail as it influences what inventory you carry, how much you carry and by when you can restock if necessary. Your suppliers are plugged into these systems and for both WMT and AMZN it works perfectly given their model.

 

Now if WMT has to replicate AMZN locations, it would clearly be very expensive. Not only that, it would be disruptive to their existing business model with suppliers- it is a classic problem incumbents face in business. That is also why you see an effort from WMT to use their retail locations as part distribution centers for their online model.(pick up from store model)

 

They will have to do something like MSFT did - scrap the old unwieldy internet explorer and build a totally new browser for the new gen. This is difficult to do, but certainly possible. It would take a lot of investment and patience from investors.

 

My difficulty with WMT is - do you think the current management is not entrenched enough to overhaul the internet strategy? I would think you need new blood to come in to make such big changes (again like MSFT)

 

rpadebet,

 

I do understand the key role of distribution centers and its historical importance in Walmart's growth and competitive advantage. But that is only part of the story. It has also cut a lot of waste in the whole distribution system.

 

Retailers have historically added a multitude of additional costs and charged these to suppliers. These take the form of display fees, rebates, handling charges, damage allowances, etc. These additional costs have been passed on to the consumers and the resulting revenue allowed retailers to ignore inefficient processes. Walmart has a one price policy that cuts all incentives for wastage in the supply chain. Walmart partners with its suppliers to cut out many inefficiencies in this process - this is an ongoing cycle. Sort of like say 3G.

 

Walmart already has relationships with suppliers and  their business processes are intertwined to reduce costs. Granted this is optimized for brick and mortar. But it does have scale and it is frequently the largest buyer of many of these suppliers so it gives them a leg up over competitors when it needs them to make changes.

 

Why is Walmart disadvantaged in building separate fulfillment centers to ship directly to customers if the economics made sense rather than using its stores? How is this going to be disruptive to suppliers? They would just ship both to existing warehouses and to these new warehouses (fulfillment centers) as well.

 

It is using current B&M stores as it might be cost effective/competitive for all we know.

 

If it makes sense to use fulfillment centers and they confer some competitive advantage to those using them, what would stop Walmart from building them? I am trying to understand if Amazon has some real advantages in building these that Walmart might not be able to replicate? Expensive is not really an issue with Walmart's resources.

 

They seem to be now focusing on eCommerce finally as they seem to have woken up to the risk from Amazon.

 

Vinod

 

Well here we are, 2 years later. Today I picked up my first grocery order-online-pickup-at store. First experience was very good. The ordering, pick up scheduling, notifying that I was there, loading the car by the Walmart attendant were all professional and no surprises.

 

The delighters,

 

- Literally no wait time. I had notified them on the phone 15 minutes before reaching and as I pulled up to the numbered space, they came out. 

- A mental barrier I (surely others have) had ordering online: Buying Bananas, tomatoes, bread and eggs. The m.o is that they show you these items before loading in the car. They apparently looked for the same things I would. They even mentioned that I could let them know if I wanted the bananas greener or riper.

- They substituted some items for larger or smaller sizes. Ex. 7.5 Oz Coke versus 12 Oz. They don't charge more. 4 items on my list were substituted and I got more than I paid for.

- I do not like paper or plastic (or worse, cardboard that comes with Amazon orders). This time I let them do plastic but they told me that they would fill up my own cloth bags the next time at the car and recycle the plastic they do use to transfer to the car. I am somewhat Ok with this, but would really like them to keep returnable bags/ containers and eliminate all plastic. "They are thinking about that". I sense they like that the lower overall costs is shared by both!

- $30 is all that's needed for this service to be free. This is a huge delighter for us as we plan to order more frequently than we do now. We do frequently throw away stuff from the fridge. Big cause for this is that we have too much in the fridge, some things get tucked away in the back. Freshness is very likely to go up in our kitchen. Cannot beat this value and this could well be a game changer.

 

- How this is all going to work is that, I will plan my pick up time while returning from work or some other planned travel(no incremental gas expense); I plan to fill up gas each time at Sam's club gas, which is in the parking lot. Sam's club gas is significantly cheaper than gas stations around me. Plus I get 5% off for using their credit.

 

Finally, the attendant was super nice. I asked him about tips and they do have a no tip policy. All they want is for me to spread the word:-) There is a $10 reward for referrals. ($10 each).

 

I like cheap and nobody beats Walmart for cheap. Cheap and convenient! I'm in. Will post any + or - experiences in the future.

 

Any one else try this?

 

In Vancouver, I use the online order and delivery service of Save-on Foods, owned by Jimmy Pattison's company...roughly for the last 2 years.  They deliver right to the door, during a 2-hr time slot I select on any given day.  We also use it for all food/kitchen delivery for Premier's office.  Excellent service, delivery and rarely a problem...which is corrected right away.  Walmart is a bit cheaper, so if they started to provide pick-up service here, I would probably also use it.  The problem is that the parking lot for Walmart, and it's primary competitor Loblaw's Real Canadian Superstore, is always jam-packed.  So I don't mind paying a little bit more and a small delivery fee to have it brought right to our kitchen.  I only go to the grocery store now if I'm doing something like barbecuing or something, or if guests are coming over, and I need to grab a few last minute items.  Never thought I would use online grocery delivery 3-5 years ago.  Cheers!

[Guest longinvestor]

Sanjeev,

Agree that it's amazing how much the world has changed.

 

I've used Peapod.com some years back. My conclusion was they priced (too high)for convenience and found that they didn't get the fresh produce business right. That's a big sliceof our needs. We gave up on them. I'm cheap, that was most of it.

[rb]

This may be a Canada vs US thing but outside of books I don't generally find Amazon cheap. If I'm looking to buy something I can find it at other places at same price or cheaper than Amazon. Very seldom Amazon is the low price. On the other hand Walmart is the low price a lot of times.

 

I don't buy a lot of groceries from Walmart because they're not as price competitive in Canada as in the US and the quality is not too good and I'll probably never buy produce online. But for packaged goods I suspect their model should work pretty well if they can keep the price down.

[Guest longinvestor]

This may be a Canada vs US thing but outside of books I don't generally find Amazon cheap. If I'm looking to buy something I can find it at other places at same price or cheaper than Amazon. Very seldom Amazon is the low price. On the other hand Walmart is the low price a lot of times.

 

I don't buy a lot of groceries from Walmart because they're not as price competitive in Canada as in the US and the quality is not too good and I'll probably never buy produce online. But for packaged goods I suspect their model should work pretty well if they can keep the price down.

 

I did a price comparison of everything I bought over the past 6 months on Amazon.com and interestingly every single item is available on Walmart.com.

 

And not a single item was priced higher than Amazon. Most were identical, a few lower. Some significantly lower. I've seen enough.

 

Next I will look back in my purchase history for about 3 years and if most items available on Walmart.com, this will be the last year of paying the Prime membership. 

[rb]

interestingly enough, despite Amazon being the tech wizards and Walmart being the bumbling hillbillies from Arkansas, the Amazon website doesn't "feel" very good. It's not easy to browse items or find sales or promotions.

[Charlie]

I´m buying a lot of things at Amazon.  ;)

I think you can increase your living standard in a lot of things if you buy the products with the highest customer ratings at Amazon.

It´s a little bit like Buffett said at the annual meeting to flip with your fingers (the example of Ajit Jain and the billions of dollars he made) and the next day it´s there.

You save a lot of time, read good customer reviews, get the best products and it´s easy.

I think with big ticket items it makes sense to compare prices, because Amazon is not that cheap.

The repeat purchases are sometimes very expensive.

 

I have thought about buying Costco shares, because of Munger, but Buffett hasn´t bought much Costco shares and

sold Wal Mart and the threat of Amazon and a P/E of around 30.  :(

In the end the customer will do what is best for him. It´s competitive destruction at a high level.

In retail Buffett cloned Pabrai, because Pabrai said much earlier to avoid retail.  ;D

 

[clutch]

I think with big ticket items it makes sense to compare prices, because Amazon is not that cheap.

 

I used to think this way too, until this happened.

 

I bought a noise cancelling headphone from Amazon. About a year after I bought it, the headphone jack broke by an accident (one could say it was my fault). I emailed Amazon to let them know what happened and see what were my options. Amazon immediately shipped the replacement product that arrived at my place the next day.

 

I'm not sure this level of customer service is available to all Amazon customers (I'm a prime member). One could also argue that this kind of over-the-top customer service is actually a money-losing tactic. But at that moment I figured I'm willing to pay premiums (both prime membership and higher cost) to buy even expensive stuff on Amazon because I get peace-of-mind in case anything wrong goes with my purchase / product. By the way, I think the extremely lenient return policy at Costco (and not just the cheap prices) also helped them retain loyal members in the similar way.

 

 

[Parsad]

I think with big ticket items it makes sense to compare prices, because Amazon is not that cheap.

 

I used to think this way too, until this happened.

 

I bought a noise cancelling headphone from Amazon. About a year after I bought it, the headphone jack broke by an accident (one could say it was my fault). I emailed Amazon to let them know what happened and see what were my options. Amazon immediately shipped the replacement product that arrived at my place the next day.

 

I'm not sure this level of customer service is available to all Amazon customers (I'm a prime member). One could also argue that this kind of over-the-top customer service is actually a money-losing tactic. But at that moment I figured I'm willing to pay premiums (both prime membership and higher cost) to buy even expensive stuff on Amazon because I get peace-of-mind in case anything wrong goes with my purchase / product. By the way, I think the extremely lenient return policy at Costco (and not just the cheap prices) also helped them retain loyal members in the similar way.

 

You're probably correct.  Alot of stuff at Costco is actually more expensive than Walmart.  But Costco's return policy and unique offerings, while knowing you are getting incredibly competitive pricing,  justifies people paying for their memberships.  Can't be because Costco is less busy, as parking lots are as full as Walmart and their cashier lineups are longer.

 

People will pay for the Amazon Prime memberships because of the service, convenience and competitive pricing.  Cheers!

[Parsad]

This may be a Canada vs US thing but outside of books I don't generally find Amazon cheap. If I'm looking to buy something I can find it at other places at same price or cheaper than Amazon. Very seldom Amazon is the low price. On the other hand Walmart is the low price a lot of times.

 

I don't buy a lot of groceries from Walmart because they're not as price competitive in Canada as in the US and the quality is not too good and I'll probably never buy produce online. But for packaged goods I suspect their model should work pretty well if they can keep the price down.

 

I thought I would never buy online produce as well, but the staff at Save-on Foods pick exactly the same quality stuff I would.  You can also tell them how you would like any specific item...ripeness, thin cuts of deli meats, substitutions are ok, meat butchered a certain way, etc.  Delivered right to your front door or kitchen!  No lugging heavy bags to the car, home and up the stairs, or time wasted selecting everything.  I can work or play while they pack and deliver my groceries.  Cheers! 

[DTEJD1997]

Hey all:

 

I haven't posted anything about WMT in a while now...but I've got another observation.

 

Even though i have a FREE membership at Sam's Club, I am itching to PAY to go back Costco.

 

WHY?

 

Many, many different reasons, but here is a new one.  One that I had suspected for quite a while but am POSITIVE about tonight.

 

As I am sitting here perusing the interwebs...I am snacking on a cup of hummus & pita chips...Hmmm, the hummus looks/tastes just a bit "funny".  Not funny in the "ha-ha-ha" way either...So I look at the expiration date.  Still good, but really damn close to the expiration date.  I just got this stuff less than a week ago.  These are the small, individually packed portions and not the 55 gallon "super saver drum" of hummus either.

 

So I think a bit and have notice several things.  Cheeze=its that I got were border line stale.  They were "close dated"...I also complained to a clerk once that Sam's club did not have the standard size Perrier water in stock.  He said, yeah, tell me about it...Who knows what corporate is doing next?  They are always looking for bargain/closeout/non-standard stuff.  This was the response of the clerk to my question.

 

So I very strongly suspect that Sam's Club is buying "close dated" stuff at a discount.  I don't think that Costco would ever do that.  Costco's turnover is probably better than Sam's Club too.

 

Counting the days till I go back...