Speaker 1: This is Bloomberg BusinessWeek with Carol Messer and Tim Steneveek
Speaker 1: on Bloomberg Radio.
Speaker 2: Two companies easily two of the biggest when it comes
Speaker 2: to selling us stuff. We're talking about Amazon and Walmart.
Speaker 2: Both have been Bloomberg Business We cover stories for different
Speaker 2: reasons and the subject of many, many more stories inside
Speaker 2: the magazine and also on the Bloomberg and at Bloomberg
Speaker 2: dot Com every single day. Matt, there's so many stories
Speaker 2: about Amazon and Walmart on a regular basis.
Speaker 1: Yeah.
Speaker 3: Absolutely, I mean, why wouldn't there be Walmart has what
Speaker 3: five hundred thousand employees or something, and you know that
Speaker 3: Paul Sweeney wants to be a Walmart reader when he's
Speaker 3: done with this career.
Speaker 1: I had no idea.
Speaker 3: Oh my god, I look for the Amazon. You know,
Speaker 3: we were just talking about FedEx and UPS and I
Speaker 3: almost wonder if Amazon has a real competitor in their
Speaker 3: own delivery network, right like other possible companies could use
Speaker 3: Amazon shipping instead of FedEx or UPS because they're that ubiquitous.
Speaker 2: Absolutely, we've had to pair back a little bit because
Speaker 2: we got a little obsessed with Amazon. Anyway, let's get
Speaker 2: to it, because the two are also the subject of
Speaker 2: a new book, Winner sells All, Amazon, Walmart, and the
Speaker 2: Battle for our Wallets. The author, Jason del Ray, is
Speaker 2: with us. He's a business journalist for fifteen years, covering
Speaker 2: e commerce for the last decade. He's here in our
Speaker 2: interactive broker's studio. Nice to have you here.
Speaker 1: Welcome, welcome, Thanks so much.
Speaker 2: Tell us a little bit about why you wrote this book,
Speaker 2: and why you wrote it now, or how long you've
Speaker 2: been working on it.
Speaker 1: So I've been working on about three years and long
Speaker 1: thought that while there have been some great books about Amazon,
Speaker 1: Bradstone's chief among them. He writes on your book that
Speaker 1: he did blurb a bit for me. Can I just
Speaker 1: say what? He wrote?
Speaker 2: A revelatory account of the bloody rivalry between two ruthless
Speaker 2: retail juggernauts that are not accustomed to losing anyway.
Speaker 1: Go ahead. Brad's been coming to me over the years
Speaker 1: and so written great books about Amazon. There's been some
Speaker 1: interesting books about Walmart, although not many in the last
Speaker 1: fifteen years. I thought to look at each in a vacuum,
Speaker 1: sometimes misses how much each other has influenced strategies and
Speaker 1: really hasn't been a deep dive into the innovator's dilemma
Speaker 1: that Walmart specifically has faced over the last twenty years.
Speaker 1: And for those reasons and a few others which we
Speaker 1: may get into, I thought, you know, looking at inflection
Speaker 1: points and their rivalry over time and where and how
Speaker 1: they've influenced each other would be interesting for retail and
Speaker 1: e commerce folks who work in the industry, but also
Speaker 1: just smart people who care about what motivates these two
Speaker 1: companies well, and just the competition.
Speaker 3: I mean, you know, households see that themselves in real time.
Speaker 3: Everybody I think has an Amazon app, right, and more
Speaker 3: and more people are getting a Walmart app. Is we've
Speaker 3: come to know it more online than just a gigantic
Speaker 3: big box store. Is Walmart starting to take away serious
Speaker 3: significant market share from Amazon online? Not yet, but I
Speaker 3: think they've finally, for a couple of different reasons, connected
Speaker 3: the dots between their stores and their you know, and
Speaker 3: their fulfillment centers and their website in a meaningful way
Speaker 3: that Amazon is. You know, they worried about Walmart a
Speaker 3: long time ago, then stopped worrying when Walmart seemed just
Speaker 3: not to be active at all in the.
Speaker 2: Space irrelevant right when it came to online.
Speaker 1: I mean for a very long time. Amazon executives have
Speaker 1: told me for a long time we were waiting ten
Speaker 1: fifteen years for Walmart to take advantage of well their
Speaker 1: key advantage, which was a store within ten miles of
Speaker 1: ninety percent of the population, and to use that either
Speaker 1: as pickup hubs or delivery many warehouses. And they are
Speaker 1: finally doing that, but it has taken a very long time.
Speaker 1: And so are they stealing market share? Not quite yet,
Speaker 1: but I think they are finally sort of competitive in
Speaker 1: the space, which sounds shocking to just have that be
Speaker 1: the minimum, but that's where we're at.
Speaker 2: I want to get into the acquisition of Walmart of
Speaker 2: diapers dot Com because that was really pivotal, and I
Speaker 2: think even as we did a cover story, but I
Speaker 2: want to ask you from your reporting, these guys are massive,
Speaker 2: and I think about when I go shopping, I shop
Speaker 2: and then I look at Amazon, and I like, kind
Speaker 2: of it's kind of always my check. Are they getting
Speaker 2: too big? Both of them?
Speaker 1: You know? I say at the end of the book
Speaker 1: that I hope that the continued competition and the fact
Speaker 1: that Walmart is finally really competitive online leads to things
Speaker 1: you know, better convenience for consumers, but also maybe better
Speaker 1: wages for employees as they compete for talent. They're both
Speaker 1: getting into healthcare.
Speaker 2: Which is something Walmart has gotten a lot of criticism
Speaker 2: for over the years.
Speaker 1: Correct, both getting into healthcare, and perhaps you know that
Speaker 1: is the industry that's ripe for better consumer you know,
Speaker 1: attention and and so maybe, but that's sort of an idealistic,
Speaker 1: you know, way to think about these two companies that
Speaker 1: have not always inspired you know, the you know, the
Speaker 1: greatest feelings among you know, I mean labor groups, consumer groups,
Speaker 1: small businesses and so are they too big? I mean
Speaker 1: I'll leave that to you know, regulators to figure out.
Speaker 1: I think Walmart's days in this in the line in
Speaker 1: sorry scrutinized spotlight fire, Yeah, has sort of passed, which
Speaker 1: has been you know, I report in the book Andy
Speaker 1: Jasse has been angered by that over the years, like
Speaker 1: white like they're the biggest retailer revenue, Like what's up?
Speaker 1: And they've had to explain like it's our turn now, right,
Speaker 1: it's our turn. And so we'll be interested to see
Speaker 1: what happens with the FTC. Will that lawsuit eventually happened?
Speaker 1: And sorry, I think, guy, Well, I.
Speaker 3: Was just gonna ask about the employees, because of course
Speaker 3: the two of them competing is good for consumers in
Speaker 3: the sense that it lowers prices.
Speaker 1: But I can't.
Speaker 3: Imagine how they would how that would benefit their employees.
Speaker 3: And I know they each try and put a positive
Speaker 3: spin on things like paying a fifteen dollars minimum wage
Speaker 3: or you know.
Speaker 1: They have college college education program. Yeah, they both sort
Speaker 1: of match each other with over the years.
Speaker 3: But they do, I mean, make a bigger margin on
Speaker 3: the backs of these employees, right, I mean, the whole
Speaker 3: point of a business like this is to kind of
Speaker 3: squeeze costs in places like labor to make more money
Speaker 3: for the shareholders.
Speaker 1: Yeah, and they both drive drive people really hard. I
Speaker 1: have a chapter in the book that's all about how
Speaker 1: in the last five years Walmart has recruited a lot
Speaker 1: of warehouse leaders and other logistics leaders from Amazon and
Speaker 1: how they sort of imported the Amazon way and culture,
Speaker 1: which not surprisingly did not always go well. And I
Speaker 1: think as they add automation, the companies will say we've
Speaker 1: taken away some of the most menial work, some of
Speaker 1: the toughest work. But what often happens at the same time,
Speaker 1: is the work speeds up. So we see all these
Speaker 1: states investigating Amazon. It's not because it's not because the
Speaker 1: you know, one one act in the work is really difficult.
Speaker 1: It's because of the repetition and the speed, and so
Speaker 1: I think it's a big issue. And they say they're
Speaker 1: you know, they're constantly improving safety and the like. But
Speaker 1: there's a lot of investigations and evidence that proves otherwise.
Speaker 2: There's a lot of stuff things and I kind of
Speaker 2: mix them together. But yeah, Jet dot com, Yeah, and Walmart. Ye,
Speaker 2: talk to us about some of the kind of interesting developments.
Speaker 2: We've got about two minutes and then we'll come back
Speaker 2: and talk some more. But were these pivotal experiences.
Speaker 1: Yeah, So, so Amazon bought diapers dot com the parent
Speaker 1: company was Quizzy way back around twenty ten, stole it
Speaker 1: from Walmart. Mark Laurie, that entrepreneur spent a few years
Speaker 1: at Amazon, starts Jet dot Com. Maybe started working on
Speaker 1: it while he was at Amazon. Not totally clear. Wasn't
Speaker 1: really working out, but a lot of attention and Walmart
Speaker 1: was needed a big you know, influx of talent make
Speaker 1: the biggest act of in e commerce at the time.
Speaker 1: Three point three billion mark LORI comes in. You know,
Speaker 1: some successes, some failures, but the metabolism of the online
Speaker 1: sales at Walmart picks up and then they both compete.
Speaker 1: Recently in healthcare on an acquisition called pill Pack, Walmart
Speaker 1: thought it had it. I have a great anecdote in
Speaker 1: the book. CEO of Walmart, Actually here's the Amazon deal,
Speaker 1: announced that they bought pill Pack instead, tries to convince
Speaker 1: the entrepreneur that he should back out of the Amazon deal,
Speaker 1: even though I mean it's kind of crazy. The deal
Speaker 1: is public to the world, and it just shows like
Speaker 1: in some key areas where they're trying to get first
Speaker 1: mover advantage, they've gone head to head, and more often
Speaker 1: than not it seems Amazon has one.
Speaker 2: We want to get back to our our guest, excuse me,
Speaker 2: business journalist Jason Delray his new book out Winter Sells
Speaker 2: All Amazon, Walmart, and the Battle for Our Wallets. He
Speaker 2: is still with us here in our Bloomberg Interactive Broker studio.
Speaker 2: Tell us about meeting because you did for this book.
Speaker 2: The CEO of Walmart, mister McMillan.
Speaker 1: Yeah, So I went down to Bentonville, Walmart's hometown, met
Speaker 1: Doug McMillan in the what they call the home office.
Speaker 1: I guess they have a new one being built. So
Speaker 1: this is the original. And it's been about ninety minutes
Speaker 1: with him. We had a sixty minute interview planned went
Speaker 1: a little over which I was I was happy about,
Speaker 1: although they did not My original pitch was to trail
Speaker 1: him for a week. That did not really work out,
Speaker 1: and that's not something that Walmart really does much of.
Speaker 1: And so Doug, you know, I was really interested in
Speaker 1: getting to know him a little bit. He's been at
Speaker 1: that he's a Walmart wifer, but they saw him as
Speaker 1: a CEO kind of bridge generations, like, you know, they talked.
Speaker 1: He talks about how he you know, he had an
Speaker 1: early Palm pilot and like was into tech and tech
Speaker 1: forward and they made him CEO about nine years ago,
Speaker 1: and so his challenge has been just massive and so
Speaker 1: it was interesting getting his thoughts on it to both
Speaker 1: you know, help reinvigorate the store business, which when he
Speaker 1: first came on board was struggling, while also trying to
Speaker 1: just you know, get internal buy in that Amazon could
Speaker 1: be an existential threat, which is how he called what
Speaker 1: he called it to his executives and also board members
Speaker 1: in those first couple of years as CEO, and you know,
Speaker 1: he sees a lot of progress there, but he told
Speaker 1: me he's still dissatisfied with the speed of transformation, the
Speaker 1: speed of change in some parts of the organization. I
Speaker 1: thought he might have one more year in him, maybe
Speaker 1: at ten years he would step aside, But there was
Speaker 1: some good reporting recently that he's going to stay on
Speaker 1: board a couple more years as they try to really
Speaker 1: make sure that this new digital DNAs is infused throughout
Speaker 1: the organization, which you know, let's be real, it's one
Speaker 1: of the biggest companies in the world. Not an easy
Speaker 1: thing to turn that ship.
Speaker 3: I wonder what I wonder what happens if the US
Speaker 3: further d keuples from China, because both of these stores.
Speaker 3: I have to be fair, I haven't spent a lot
Speaker 3: of time in a Walmart, but I do spend a
Speaker 3: lot of time on the Walmart app and on the
Speaker 3: Amazon app, and I often try and look for products
Speaker 3: that are made in America or I just noticed that
Speaker 3: all of my choices are made in China, like everything.
Speaker 1: And the brand name is it's something you can't exactly.
Speaker 3: So, but do they do they make an effort to try,
Speaker 3: and I wish Amazon would have a made in America section,
Speaker 3: but they don't.
Speaker 1: For a while. Yeah, and I thought, and I know
Speaker 1: Amazon now has like a small a small business badge,
Speaker 1: which I think there's been some reporting that's proven to
Speaker 1: not always be completely accurate.
Speaker 3: Small business from China.
Speaker 1: And listen, Amazon made this bet back in about twenty thirteen,
Speaker 1: the twenty fifteen that they were going to go all
Speaker 1: out courting Amazon sorry Chinese suppliers and sellers, and you know,
Speaker 1: they went growth, growth, growth, and they knew there would
Speaker 1: be some trade offs, and they've just kind of lived
Speaker 1: with it. I thought Walmart had an opportunity on their website,
Speaker 1: at least when they were welcoming in new sellers trying
Speaker 1: to build that marketplace business to take a different path.
Speaker 1: Now maybe that wasn't no Chinese sellers, but maybe that
Speaker 1: was US sellers only or something, you know, something that
Speaker 1: would be more curated and something they could market honestly.
Speaker 1: And they just I think mostly under Marc Luri, a
Speaker 1: previous e commerce leader and entrepreneur, they really went after
Speaker 1: just growth and expanding the seller base, and they opened
Speaker 1: up to China in a big way, and you know,
Speaker 1: I hope it doesn't blow up in some way for
Speaker 1: you know, for either company, because that'll mean that something
Speaker 1: bad happened for consumers on the marketplace business. But it just,
Speaker 1: you know, there's a reason. It just doesn't seem natural
Speaker 1: to have every product available across the world at your
Speaker 1: fingertips without knowing a ton about the person behind it.
Speaker 1: And that's sort of where we're at today.
Speaker 2: But Jason, can we have a world where both Amazon
Speaker 2: and Walmart exist? I mean, your book is Winter sells.
Speaker 1: All y right? Right? No, So I think there was
Speaker 1: a long period of time where some people at the
Speaker 1: top of Walmart were concerned if they didn't start making
Speaker 1: a dent and getting their act together, that yes, in
Speaker 1: some key online categories, there would be one winner, and
Speaker 1: that would be Amazon with ninety percent market share, ninety
Speaker 1: five percent market share. I think they've done enough over
Speaker 1: the last few years that that reality does not seem
Speaker 1: you know, in the near term. And putting aside Amazon's
Speaker 1: also its own struggles in the last couple of years
Speaker 1: with cost cutting and the like.
Speaker 2: But does Walmart have an advantage because it does have
Speaker 2: stores and I think about some store or that I
Speaker 2: shot at that. I love that I can order online
Speaker 2: pick up.
Speaker 1: In a store.
Speaker 2: Do like I have a lot of flexibility.
Speaker 3: I don't like to hang out in a store. It's
Speaker 3: not as much fun to hang out online.
Speaker 2: But I do wonder is there that an advantage potentially,
Speaker 2: especially as it builds.
Speaker 1: It should be. It should be. And as you know,
Speaker 1: as we see labor costs up over the last couple
Speaker 1: of years, supply chain costs, logistics cost up, you know,
Speaker 1: returning items, like returning e commerce items. It should not
Speaker 1: like it. The math doesn't work to do it free
Speaker 1: by shipment, and so Amazon has failed up to date
Speaker 1: with a real physical presence. And I think they'll keep
Speaker 1: at it because it is an advantage for Walmart, even
Speaker 1: if it's just to give customers, yes, place to pick up,
Speaker 1: but a place to return. Right. I ordered trying to
Speaker 1: get ready for this week and my book launch, ordered
Speaker 1: like forty seven different white shirts online, and like, you know,
Speaker 1: knowing I could just ship them back or in some
Speaker 1: cases return to a store, but not an Amazon store.
Speaker 3: It's interesting in terms of the fact that no one's
Speaker 3: written a book about Amazon Walmart, and no one's really done.
Speaker 2: Matt Brad written two books.
Speaker 3: Well, no, Amazon, that's about Amazon. I'm talking about Walmart.
Speaker 1: Yeah.
Speaker 3: Are they secretive or they are? You know, is it
Speaker 3: hard to get in there? They wouldn't, yeh, hang out
Speaker 3: with the CEO for a week. I get that because
Speaker 3: that's annoying.
Speaker 1: But yeah, and they've they've.
Speaker 2: They're very secretive.
Speaker 1: They are secretive, I think Listen, I think they participated
Speaker 1: in some way for a couple of reasons. I think
Speaker 1: I showed them over the years I was going to
Speaker 1: publish stuff that they didn't think would get out of
Speaker 1: the company that did, and so I would continue to
Speaker 1: And I think they wanted to tell try to tell
Speaker 1: the story that they are finally turning a corner and
Speaker 1: that they you know, they get how far they were behind,
Speaker 1: and but that they can lead in some ways. I
Speaker 1: think also, you know, for a lot of years when
Speaker 1: they were they've seen you know, Amazon has been in
Speaker 1: the spotlight for a lot of bad reasons in the
Speaker 1: press and in DC for the last couple of years.
Speaker 1: So they have some opportunity here to tell a different
Speaker 1: story as well and sort of stand apart from Amazon.
Speaker 2: I'm thinking of our audience just got about unfortunately, Jason
Speaker 2: about thirty seconds left here. We talked about healthcare healthcare earlier.
Speaker 2: Should our investment world and audience be watching these two
Speaker 2: in terms of what they might do to healthcare?
Speaker 1: Absolutely? I think ten years from now we may I
Speaker 1: don't know if we're being these jobs, but if we were,
Speaker 1: and we were back here, I think we may look
Speaker 1: back and say the biggest impact these companies have had
Speaker 1: in the last ten years on everyday people have is
Speaker 1: in healthcare, whether that's physical clinics like Walmart clinics one
Speaker 1: Medical clinics which now Amazon owns, or virtual care, or
Speaker 1: maybe upending the insurance industry in some way. You know,
Speaker 1: the biggest challenge to Walmart in the healthcare is they've
Speaker 1: just churned through leaders yea, and they say there's a commitment,
Speaker 1: but we need to see that, you know, that sort
Speaker 1: of come through in steady leadership.
Speaker 2: This was fun.
Speaker 1: Good luck with the book, thanks so much.
Speaker 2: Good luck with the white shirt.
Speaker 1: I mean I have many, I have many at home
Speaker 1: waiting to go back. Jason del Ray.
Speaker 2: The book is Winter sells All Amazon, Walmart and the
Speaker 2: Battle for Our Wallet's