How Walmart and QVC compete with Amazon for e-commerce sales
In 2017, Amazon was responsible for 44% of all U.S. e-commerce sales. In fact, the online giant accounted for 4% of all retail sales, according to One Click Retail. The fastest growing product groups were beauty and grocery, which you can read more about in past posts on this blog (here and here).
According to One Click Retail CEO, Spencer Millerberg, “every major trend we see across 2017 can be explained by the fact that more of Amazon’s core demographic (millennials) are growing up: they’re increasingly owning homes, raising children, and buying a TON of stuff to go with it.”
How does any company compete with such a giant?
Walmart holds the number two spot for e-commerce sales, and since a merger with the Home Shopping Network in January, QVC has jumped into third place. Here are a few factors that have contributed to their success:
Stick to what you know
Walmart knows groceries. In fact, they captured 17.5% of all U.S. food and beverage sales in 2016, according to Business Insider. This makes Walmart the largest grocery store in the U.S. Since this is a category that Amazon has showed a recent focus on (primarily with its acquisition of Whole Foods), Walmart has also turned its attention to online grocery delivery. In the coming year, Walmart plans to leverage its brick-and-mortar locations to add 1,000 online grocery pickup locations across the country (CNBC). It is imperative that Walmart keeps a strong hold on groceries since it is already integral to the retailer’s success.
For QVC, their formula for live broadcasts of unscripted product demos is what sells. Amazon tried to mimic this program by launching “Style Code Live” in 2016. The online show was canceled just a year after it began. “The retreat proved that QVC’s formula—unscripted hosts demonstrating products to an audience of mostly women on live television—isn’t as easy as it looks,” wrote Bloomberg Businessweek. In this case, QVC’s unique format be their biggest selling point when competing with Amazon.
Buy the competition
Mergers and acquisitions are hot for online retail right now. Amazon has been gobbling up competitors since it first acquired Audible in 2008. Most recently, Amazon acquired Whole Foods in 2017 (and rumors of the giant buying Target have been swirling for months).
Both Walmart and QVC have also made recent deals to position themselves in e-commerce. In January 2018, QVC completed a merger with the Home Shopping Network. This merger propelled QVC to the number three slot in online sales. QVC had already purchased the flash sale site Zulily two years ago–helping to bolster online sales.
Walmart has acquired online giants like Jet.com, but also boutique brands such as Bonobos and Hayneedle. It’s not enough to compete with Amazon alone–even for a behemoth retailer such as Walmart. Buying up competition and merging to create a larger group of retailers seems to be a popular strategy for these top e-commerce players.
Create an experience
Finally, the way a brand positions itself is imperative to capturing the online millennials who drive Amazon sales. “We’re establishing a relationship with viewers,” longtime QVC host David Venable told Bloomberg. “If you go to other online retailers, it’s a transaction. When you come to QVC, it’s a social experience.” In a February episode of the resurrected sitcom “Will & Grace,” the show’s lead characters try to sell a home line on QVC. Not only that, the clip shared a real phone number for viewers to call and connect with the show.
Although this “social experience” is what QVC is betting on to attract new viewers and retain existing shoppers, their average customers skews much older than the millennial who purchases on Amazon. For retailers to keep up with Amazon’s large market share, they’ll have to carve out a niche and make it appealing to multiple generations.
Have you noticed any indicators to succeeding in the online retail space? If you have tips on competing in the e-commerce world, leave a comment below!
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Written by Kim Kelly Consulting
