Walmart's Price Is Right...Behind Amazon

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As the weather continues to drop, e-commerce price wars are heating up. A new study found that goods on Walmart’s (+0.01%) online store cost only 0.3% more on average than those on Amazon (+0.83%)...much tighter than the 3% gap last year. 

We submit wearables (fitness trackers & smart watches) as evidence: last year, Walmart’s prices came in 12.6% above Amazon’s. This time around? They were 6.4% lower. 

And it’s not a moment too soon for Walmart

As the holiday shopping season kicked into gear (right when you kicked someone to reach the last remaining 4K TV), online shoppers stuffed stockings in record numbers. Just look at this latest Black Friday: in-store shopping fell 4%from 2016 while online sales jumped 18%. Not to mention yesterday’s Cyber Monday mania, which brought in ~$6.6 billion (17% YoY growth).

Numbers like these seem to justify Walmart throwing the piggy bank at e-commerce. To compete with Amazon, the retailer acquired Jet.com for $3.3 billion, moved to two-day delivery, and spent $1 billion to slash prices. And it’s paying off: Q3 online sales grew 50%.

But don’t get the impression Walmart is even remotely close to touching Bezos’ online empire. This year, Amazon will grab 43.5% of U.S. online sales. Walmart will take only 3.6% of the pie. 

And online bargain-basement prices won’t close the gap on their own

Walmart’s got a tricky balancing act on its hands. While it wants to carry its reputation as the “low price leader” to the online marketplace, it doesn’t want these low prices cannibalizing its higher-margin, brick-and-mortar stores. 

Because as much as online shopping generates media buzz, physical stores still account for more than 90% of all retail sales. And with 4,700 locations in the U.S., Walmart plans to keep them busy this holiday season.

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