Amazon, Wal-Mart: Why the e-commerce giant beats the big-box retailer

Why Amazon Beats Wal-Mart: A Tale from Black Friday

Why Amazon Beats Wal-Mart: A Tale from Black Friday

Innovation, the Internet, gadgets, and more.
Nov. 28 2012 6:27 PM

Why Amazon Beats Wal-Mart

A tale from Black Friday.

People shop at Walmart.
Black Friday demonstrates how Amazon is better than big-box retailers like Wal-Mart

Photograph by Allison Joyce/Getty Images.

Last Friday morning, I woke up with a single abiding need: I had to have a new Xbox 360. My old one died a few weeks ago—well out of warranty, it came down with the dreaded “Red Ring of Death” technical failure. This wasn’t a big deal, because I never have time to play games, but this weekend my parents were in town and were happy to take care of my pesky toddler. I had a free day. And for me, on a day off, there’s nothing more relaxing than a few hours with the new Call of Duty. So, you see, I was desperate.

Not long ago, I would have ordered my console—and every other big-ticket item—from Amazon to avoid paying sales tax. (Yes, I know about use taxes.) But in September Amazon began collecting sales tax in my home state of California, so now it doesn’t cost me any more to buy from local stores. Fortunately, I’m surrounded by big boxes that supposedly carry the Xbox 360: Within a five-minute drive from my house, there’s a Target, Wal-Mart, Best Buy, GameStop, and Fry’s (a California-based electronics chain). Yes, it was Black Friday, so I knew the stores would be a little nuts. But I wasn’t planning to go shopping right when the doors opened, and I wasn’t looking for a heavily discounted item. I just wanted a plain-Jane, full-priced model of a console that first went on sale in 2005. How hard could that be?

Very, very hard, it turned out. My terrible experience on Black Friday confirmed what I’ve long suspected about brick-and-mortar stores: They’re inherently, perhaps unfixably less consumer-friendly than online retailers. It also called into question the grand plans that Wal-Mart and its big-box cohort have for fighting Amazon.


I’m very familiar with those plans. Over the past few months, I’ve spent many hours interviewing executives at Wal-Mart—including Mike Duke, the company’s CEO—about how the firm aims to rehabilitate its digital operations. In my article published in the new issue of Fast Company, I argue that the world’s biggest retailer has several potential advantages over Amazon. In particular, Wal-Mart has stores. By making its 4,000 physical locations more friendly to smartphones and more plugged-in to the Web, Wal-Mart is planning to do amazing things, including letting you order something and get it delivered that same day from your local store; pick up your online order in a store on the day you order it (a feature that’s already available); and pay for your in-store purchases on your smartphone, skipping the checkout lines entirely. "We are uniquely positioned to give customers anytime, anywhere access to Wal-Mart by combining the smartphone, online, and the physical stores," Duke told me. "Ultimately, that will give us an edge over any competitor."

That, anyway, is the dream, and I still believe Wal-Mart can achieve it someday. But in trying to buy one measly Xbox, I came face to face with two daunting problems for the big-box stores that want to take on Amazon. The first is logistics. The second is people.

So here’s what happened. I began my search at about 11 a.m. at Target, which I’d guessed wouldn’t be as crowded as Wal-Mart. Target’s website has a feature that lets you track inventory at your local store, but when I tried to look up whether my store had any consoles left, the system didn’t work. So I walked into the store to look for myself—and, in the electronics department, I found a disaster zone. There were shoppers and carts and merchandise everywhere, and the only two staffers in the area were trying to keep up with the lengthy checkout line. I couldn’t find any Xboxes on the shelves; eventually I located a cabinet with a locked glass door that looked like it had once contained game consoles, but it was empty. I faced a similar situation at GameStop—too many customers, too few employees, and (as I learned from one harried, seemingly 15-year-old staffer) no more Xboxes.

My Wal-Mart experience began more promisingly. Checking on my phone, I discovered that my local store did have Xboxes in stock. Like Target, the store was pretty messy, but I did find one blue-vested worker in the video game section. It began to look like I was home free—I would just ask him where the Xboxes were and be on my way.

But when I told him what I was looking for, he eyed me suspiciously. “Are you sure you checked this store?”

“Yes, this store.”

“Really? You typed in this zip code?”

“Yes. Let me show you right here.” I began to pull out my phone, but he would have none of it.

“You know, I wouldn’t drive all the way over just because of something I saw online,” he advised.

“So you don’t have any left?” I asked, crestfallen.

“It’s better to call and ask if we have something.”

“OK—so the Xboxes are sold out?” I pleaded.

“Like, for months, the website said that we had the Nexus 7. People would always come over and ask for it. But we didn’t have any.” He paused for a beat before letting me in on a grand truth about the universe: “Sometimes the Web is wrong.”

“OK, but are you really sure the Xbox is gone?”