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 Walmart.com 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?”

“We don’t have any.”

Not surprisingly, I didn’t trust Mr. Blue Vest. So, back in my car, I logged back in to Walmart’s site and ordered the Xbox, electing for same-day, in-store pickup. The purchase instantly went through; within four hours, the site promised, I’d get a message telling me to pick up my order. I was ecstatic.

But an hour and a half later, I received a horrible email: Wal-Mart had canceled my order. Despite what the site had promised, the Xbox was indeed sold out. “We're sorry for any inconvenience this may cause you,” the email offered.

Late that afternoon, I did get my Xbox at Fry’s. (The store didn’t allow me to check inventory online or on the phone, but the salespeople were very nice and knowledgeable.) Given that I wasn’t injured in a stampede and I was eventually able to escape into Call of Duty, you could argue that I’m making too much of my Black Friday hassles. After all, wasn’t I the moron for expecting a pain-free shopping experience on the busiest day of the year?

I don’t think so. Almost a week later, I’m still annoyed at how terribly things went at Target, GameStop, and Wal-Mart. Black Friday is the retailers’ showcase, a time when they should do everything they possibly can to ensure they perform flawlessly—to inspire customers’ long-term loyalty by delivering more than they were expecting. What I love about Amazon is that it consistently does so. I’ll often select two-day shipping and get my item in one day. I’ll return something and get the money credited to my account immediately. Once, I called Amazon to complain that I hadn’t received a Kindle I’d ordered. The customer service rep arranged to send me a new one immediately—even though, as I later called back to explain sheepishly, the Kindle box had arrived and had simply been buried in a pile of unopened boxes in my office. (I get a lot of packages.)

Wal-Mart isn’t any less technically capable of providing that level of service. It’s got lots of smart executives and engineers working to make its digital services flawless. The difference is that Amazon’s e-commerce business consists of a single service—shipping stuff to your house from its many warehouses—that it has optimized to amazing ends. Wal-Mart, on the other hand, aims to do lots of different things. It wants to improve its in-store experience so it pairs better with your smartphone. It wants to ship stuff to your house as quickly as possible. It wants to let you order stuff and pick it up in the store without any hassle. If all these things worked, Black Friday would be a breeze: You’d walk in, be guided by your phone to all the stuff on your list, and pay for your purchase with a click of a button.

But doing all that is a logistical nightmare. For one thing, Wal-Mart would need to find a way to keep track of its products in a chaotic store, when people are moving stuff all over the place or hogging the items for hours in their carts. It also means retraining its millions of workers to make sure that—even in the depths of Black Friday chaos—they’re always knowledgeable and never less than friendly. And even then, things will go wrong. When you order something from Amazon, there are only a few potential points of failure: the site, the warehouse, and the shipper. At Wal-Mart, there are a billion: Every customer in every store could have a problem with any product or employee. It’s a wonder that the system works as well as it does.

This morning I spoke to Joel Anderson, the CEO of Walmart.com, about what happened on Friday. “I personally apologize for the experience you had, and I apologize for any other customer that might have experienced that,” he told me. Anderson explained that Wal-Mart had turned off same-day pickup on Thanksgiving Day. “We probably shouldn’t have turned it on Friday either,” he admitted. When I asked about why that Wal-Mart worker had pooh-poohed the website’s inventory listing, he said there were some “misaligned incentives” between store workers and Web orders. At the moment, in-store employees don’t get any credit toward their bonuses for sales made online but picked up in a store. Next year, though, Walmart is instituting a plan that will credit in-store employees with online sales. “We believe that’s a big step in the right direction to get associates equally focused on all types of orders,” Anderson says.

He also added that Walmart keeps getting better. On Monday—I’m sorry, “Cyber Monday”—the store saw a huge increase in same-day store pickups, and most of them went flawlessly, Anderson claimed. None of that would have been possible a few years ago. “We’ve come a long way in the last year and a half, and now we need to take it to the next level,” he said. “We’re going to keep leaning in until we get it right.”

TODAY IN SLATE

Medical Examiner

Here’s Where We Stand With Ebola

Even experienced international disaster responders are shocked at how bad it’s gotten.

It’s Legal for Obama to Bomb Syria Because He Says It Is

Divestment Is Fine but Mostly Symbolic. There’s a Better Way for Universities to Fight Climate Change.

I Stand With Emma Watson on Women’s Rights

Even though I know I’m going to get flak for it.

It Is Very Stupid to Compare Hope Solo to Ray Rice

Building a Better Workplace

In Defense of HR

Startups and small businesses shouldn’t skip over a human resources department.

Why Are Lighter-Skinned Latinos and Asians More Likely to Vote Republican?

How Ted Cruz and Scott Brown Misunderstand What It Means to Be an American Citizen

  News & Politics
Politics
Sept. 23 2014 12:43 PM Occupy Wall Street How can Hillary Clinton be both a limousine liberal and a Saul Alinsky radical?
  Business
Moneybox
Sept. 23 2014 2:08 PM Home Depot’s Former Head of Security Had a Legacy of Sabotage
  Life
Outward
Sept. 23 2014 1:57 PM Would A Second Sarkozy Presidency End Marriage Equality in France?
  Double X
The XX Factor
Sept. 23 2014 2:32 PM Politico Asks: Why Is Gabby Giffords So “Ruthless” on Gun Control?
  Slate Plus
Slate Plus
Sept. 22 2014 1:52 PM Tell Us What You Think About Slate Plus Help us improve our new membership program.
  Arts
Brow Beat
Sept. 23 2014 2:31 PM 3 Simpsons Showrunners Reflect on New Fans and the “Classic Era” Myth
  Technology
Future Tense
Sept. 23 2014 1:50 PM Oh, the Futility! Frogs Try to Catch Worms Off of an iPhone Video.
  Health & Science
Science
Sept. 23 2014 1:38 PM Why Is Fall Red in America but Yellow in Europe? A possible explanation, 35 million years in the making.
  Sports
Sports Nut
Sept. 18 2014 11:42 AM Grandmaster Clash One of the most amazing feats in chess history just happened, and no one noticed.