Is Amazon More Expensive than Walmart?

by JT McGee

Amazon is actually more expensive than Walmart, according to a study on online shopping. On 36 items, Amazon was an average of 20% more expensive.

So what makes Amazon more expensive?

Well, actually nothing

It really comes down to what you purchase. The study reports that a box of Bisquick pancake mix is more than $14 on Amazon, and only $6.12 at Walmart. From what I can tell, the study looked at the price for a 96 oz box of Bisquick pancake mix.

Seriously? Anyone knows it costs a fortune to send a 6 pound box cross country in two days.

I’ll leave that one alone. But here’s the deal: Amazon had all items in stock at the time of the study. At Walmart.com, 14% of goods were out of stock. For the record, the 96 ounce of Bisquick was out of stock. I tried to backorder it at Walmart.com only to find that I could not lock in my current price.

In effect, the study used prices at which Walmart apparently could not gather sufficient supplies.

Amazon, in many cases, has supply only because it relies on third-party sellers. Amazon is, in effect, a tiny economic ecosystem of buyers and sellers. Of course, individuals and small businesses cannot beat Walmart pricing on heavy packages of Bisquick, especially if Walmart’s price is so low that Walmart itself cannot even deliver on its offer.

Asked why Walmart doesn’t advertise its cost advantage to Amazon, a Walmart spokesperson said they’d leave it to Kantar to advertise that fact. (Kantar being the people behind the study.) This is silly. Walmart is getting rocked in online retail – advertising its lower prices is obviously a great idea if Walmart actually has lower prices. But Walmart clearly does not – it has lower prices on out of stock goods included in Kantar studies.

Aha!

Kantar is owned by WPP, one of the largest marketing firms in the world. WPP has, through its subsidiaries, bid to be Walmart’s media partner on several occasions. Walmart spends billions of dollars on advertising.

Amazon doesn’t. Jeff Bezo’s Amazon spent $25 million on measured media in 2007. Not much has changed since then. Walmart spent $2.3 billion in 2008.

I have no proof. But I do have the ability to think freely. WPP has nothing to lose by pissing off Amazon, and everything to gain by making Walmart happy – we’re talking about ad budgets that are magnitudes apart. So, don’t be so quick to believe everything you read. Money influences every “study.”

{ 5 comments… read them below or add one }

tom August 27, 2012 at 13:13

I find this study to be ridiculous as well. Besides the in-stock, out-of-stock issue, Amazon would kill them in prices of most non-grocery items.

Amazon is great for many things, but groceries are not among them. Comparing Bisquick prices does not make for a good sample within a study.

They’d be hard pressed to compare to consumer electronics, let alone random things like baby supplies.

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JT August 28, 2012 at 10:22

Amazon would and does kill on those categories. But save science and true research for nerds – this “study” is 100% marketing nonsense.

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PK August 28, 2012 at 10:34

Hey I just did the math – it’s more expensive for me to ship pancake batter from China than it is to buy it from my local gourmet supermarket. Therefore, China is expensive, QED.

Don’t you love studies like that?

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101 Centavos August 29, 2012 at 05:07

Most groceries aren’t worth it in the Amazon route, except for a very few. Cuban coffee is one of them, a near-perfect wash between Amazon and Walmart (with Prime free shipping). Both of them trade places on being out of stock, only difference with Amazon, it only takes a few mouse clicks to verify.

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Andy August 30, 2012 at 06:44

I think it’s a case of convenience really. People are generally lazy so the fact they can get the item delivered directly to the door is irrelevant, even if it means paying a little more.

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