As the holiday shopping season kicks into high gear, Walmart has managed to close to the gap with Amazon on pricing — an indication that its investments have panned out so far. Prices at Walmart.com are now only 0.3% higher than Amazon on average, according to a study by Market Track, a retail data analytics firm.
The Market Track report, conducted for Reuters, analyzed prices of 213 products in 11 categories over a period of 700 days ending November 7, 2017.
The 0.3% price differential is a substantial improvement for Walmart, which saw prices that were 3% higher than Amazon on average in the 350 days ending November 7, 2016. A similar study from Profitero, which examined 13 categories, revealed that Walmart priced these products 3% higher than Amazon in 2017. However, the 2014 version of the Profitero study indicated a 9% price differential between Amazon and Walmart products, so it’s clear that the gap has narrowed regardless of which items are studied.
The report comes at a time when Walmart actually is raising select prices online to drive in-store traffic, a decision that has raised a few eyebrows among those who believe prices should be consistent across all channels. Walmart has made it a point to utilize different techniques to drive in-store purchases, such as introducing an in-store pickup discount to its omnichannel offering.
Walmart actually has Amazon beat on select products, according to the Market Track report. Wearable technology prices are 6.4% lower at Walmart, a major swing compared to 2016 when prices were 12.6% higher. For sports and outdoor products, Walmart is now 1.3% lower, versus 3.5% higher a year ago.
With both companies battling for pricing supremacy, it’s going to be difficult for other big box retailers and grocers to continue competing purely on price. They risk fighting a race to the bottom that their infrastructure may not be able to handle.
Even Walmart is taking a big hit for this, despite the retail giant’s continued sales increases both in-store and online. Operating margins have fallen for four straight quarters, reaching 2.8% in Q3.