Walmart Inc. shoppers are a pretty loyal bunch. But when virus-spooked Americans began avoiding stores earlier this year and shifting spending online, far more Walmart customers went to Amazon.com Inc. than Walmart.com. So even though Walmart, too, has thrived as an essential service amid the pandemic, Amazon is benefiting more. In the first week of February, for every dollar shoppers spent with the two rivals, 66 cents went to Walmart and 34 cents to Amazon, according to Facteus, which tracks credit and debit-card spending for millions of shoppers. In the first week of August, that gap narrowed to 55 cents to Walmart and 45 cents to Amazon. Walmart, through a spokesman, declined to comment.
When the coronavirus began spreading across the the U.S., Amazon stumbled at first. Shipping times lengthened; multiple products were out of stock. Some reports said the company’s vaunted customer service metrics were starting to slip. Amazon responded by hiring 175,000 people to keep its operations running as existing employees sickened or stayed away for fear of catching Covid-19.
The strategy, which included stepped-up safety measures in warehouses, eased investors’ fears. But few predicted the second-quarter earnings report that shattered Wall Street’s already optimistic expectations and forecast a continued surge in demand even as stores start to re-open. The shares have advanced more than 65% this year, compared with a 3% gain for the S&P 500.
Turns out the online retail giant was perfectly situated to take advantage of a sudden shift in consumer behavior that, according to McKinsey, has compressed 10 years worth of online sales growth into three months. Amazon’s easily searchable website packed with hundreds of millions of products that can be delivered from warehouses scattered across the country stood out more than ever when the malls and Main Street went dark. And shoppers suddenly became quite forgiving of delivery delays. More than 8 in 10 thought holdups of a few days or longer were reasonable given the outbreak, according to a survey of 500 Amazon consumers conducted in June by Minneapolis, Minnesota-based Goat Consulting.