Amazon and Wal-Mart might once have existed in parallel universes, but these days they’re in a price war. Both giants are now seeking to make acquisitions to compete on the other’s turf.
Amazon.com Inc. is going to have a significant brick-and-mortar presence. The only remaining question is when and how. Perhaps it’ll be a new high-tech store created by Amazon wizardry, like Amazon Go grocery store, which was announced early this year. The company is slowly rolling out physical bookstores. But last week there were signs that Amazon could accelerate that push via an acquisition in one form or another. First was the report that Amazon considered buying Whole Foods last fall. And then over the weekend there was a report that BJ’s Wholesale Club is putting itself up for sale, with Amazon showing some interest.
Amazon’s logic is straightforward: It wants to sell to consumers wherever consumers want to buy, and plenty of sales still happen in stores. Amazon’s revenue in 2016, which includes all of its businesses, not just selling goods to consumers, was $136 billion, still barely more than a quarter of Wal-Mart’s $486 billion. Whole Foods and BJ’s each have annual revenue north of $10 billion. Assuming Amazon does make a big push into stores, it would be following the path blazed by Sears a century ago, when it took advantage of an expanded railroad network — the internet of its time — to build a catalog business that eventually led to a large physical retail presence.