TownSmith | White Papers

Amazon vs. Wal-Mart

When faced with a competitor like Amazon.com, it is tempting to see their brand identity and reputation for customer service as insurmountable competition. They are, it is said, as present and prescient as Wal-Mart—and not just because of certain managerial similarities.

Indeed, Amazon and Wal-Mart have more in common than even they might acknowledge in these litigious times. They have parallel retail philosophies: create a large and efficient system of distribution, have a simple and memorable brand name, and build that name through breadth of product and though a strong, visible customer service strategy.

The only piece of the Wal-Mart plan to which Amazon has not completely adhered is the community. Wal-Mart aims to position itself as a substitute downtown for the communities it enters. Through location, leaders, and community involvement, Wal-Mart has tried to take the best of small town centers and transfer it to their stores. Amazon hasn't yet paid a lot of attention to these aspects of the Wal-Mart equation, and that can provide an agenda for potential competitors. Location, leaders, and involvement equate easily to web sites.

Wal-Mart stores are often located at or near established town centers, places people are used to visiting, along well-established traffic routes. They also hire community senior citizens as visible members of their in-store teams, using the people around which the community already revolves to shift the community center toward their stores. Finally, Wal-Mart stores get involved with the community through charities, school programs, and community events. They establish themselves as the central place to support the community's most popular causes.

Location on the web doesn't mean geography, it means topic. Communities on the Internet are built around topics of interest, and the online equivalent of the Wal-Mart strategy would be either to find and align with established community centers or to create new ones. A bookseller might look for online book clubs, a music site might establish bulletin boards and chat rooms based on a genre or musician.

Within these online communities, as within physical communities, leaders emerge. They are the people who help newcomers into the community, who answer questions, who provide new conversation avenues. People are stimulated by online communities in part because they can be leaders, regardless of income, education, or personal connections. An online community should enlist these established leaders to review items for sale, to create top ten lists, to help customers through the purchase process. Like the senior citizens who are often the greeters at Wal-Mart, these leaders soften the sales experience, creating an inviting atmosphere.

Finally, an online community, like a physical one, has interests and issues that bind the members together. Establishing relationships with relevant charities or local activities by posting a calendar of events, web pages for charities, or even just message board conversations helps to build the community at large through the Web site. A blues music community, for example, might be interested in a musician's help fund or a charity that raises money for school instruments. A community member might want a list of all the blues clubs in their new city, or a means of following their favorite musician around the country. By creating this kind of relationship with the community member, the Web site increases the likelihood that the member will purchase there as well.

The underlying advantage to creating a community site is that it provides multiple ways to create a relationship with a customer and have their contact information. Amazon knows customers that buy, or that review a specific book. But a retail community sponsor knows the names of all the customers that haven't bought yet—an important advantage when a consumer will visit a site four or five times before making a purchase. Also, creating community provides an unprecedented opportunity to contact or analyze the potential shoppers, and learn why they haven't bought yet. There is no other retail channel capable of creating this kind of dialogue on the scale that the Internet can. While retailers can wander the floor of the store or conduct focus groups or send out surveys to get responses, internet community sponsors can ask thousands of focussed community members what they like, how they feel, what they'd change on a daily basis.

—Rhiannon Jones

Rhiannon Jones is the owner of Digital Geographer, a company that applies real-world community-building to the online environment, and has worked with companies that have implemented the Townsmith Suite, including Delta Road.

	When faced with a competitor like Amazon.com, it is tempting to see their brand identity and reputation for customer service as insurmountable competition. They are, it is said, as present and prescient as Wal-Mart—and not just because of certain managerial similarities. Indeed, Amazon and Wal-Mart have more in common than even they might acknowledge in these litigious times. They have parallel retail philosophies: create a large and efficient system of distribution, have a simple and memorable brand name, and build that name through breadth of product and though a strong, visible customer service strategy. The only piece of the Wal-Mart plan to which Amazon has not completely adhered is the community. Wal-Mart aims to position itself as a substitute downtown for the communities it enters. Through location, leaders, and community involvement, Wal-Mart has tried to take the best of small town centers and transfer it to their stores. Amazon hasn't yet paid a lot of attention to these aspects of the Wal-Mart equation, and that can provide an agenda for potential competitors. Location, leaders, and involvement equate easily to web sites. Wal-Mart stores are often located at or near established town centers, places people are used to visiting, along well-established traffic routes. They also hire community senior citizens as visible members of their in-store teams, using the people around which the community already revolves to shift the community center toward their stores. Finally, Wal-Mart stores get involved with the community through charities, school programs, and community events. They establish themselves as the central place to support the community's most popular causes. Location on the web doesn't mean geography, it means topic. Communities on the Internet are built around topics of interest, and the online equivalent of the Wal-Mart strategy would be either to find and align with established community centers or to create new ones. A bookseller might look for online book clubs, a music site might establish bulletin boards and chat rooms based on a genre or musician. Within these online communities, as within physical communities, leaders emerge. They are the people who help newcomers into the community, who answer questions, who provide new conversation avenues. People are stimulated by online communities in part because they can be leaders, regardless of income, education, or personal connections. An online community should enlist these established leaders to review items for sale, to create top ten lists, to help customers through the purchase process. Like the senior citizens who are often the greeters at Wal-Mart, these leaders soften the sales experience, creating an inviting atmosphere. Finally, an online community, like a physical one, has interests and issues that bind the members together. Establishing relationships with relevant charities or local activities by posting a calendar of events, web pages for charities, or even just message board conversations helps to build the community at large through the Web site. A blues music community, for example, might be interested in a musician's help fund or a charity that raises money for school instruments. A community member might want a list of all the blues clubs in their new city, or a means of following their favorite musician around the country. By creating this kind of relationship with the community member, the Web site increases the likelihood that the member will purchase there as well. The underlying advantage to creating a community site is that it provides multiple ways to create a relationship with a customer and have their contact information. Amazon knows customers that buy, or that review a specific book. But a retail community sponsor knows the names of all the customers that haven't bought yet—an important advantage when a consumer will visit a site four or five times before making a purchase. Also, creating community provides an unprecedented opportunity to contact or analyze the potential shoppers, and learn why they haven't bought yet. There is no other retail channel capable of creating this kind of dialogue on the scale that the Internet can. While retailers can wander the floor of the store or conduct focus groups or send out surveys to get responses, internet community sponsors can ask thousands of focussed community members what they like, how they feel, what they'd change on a daily basis. —Rhiannon Jones Rhiannon Jones is the owner of Digital Geographer, a company that applies real-world community-building to the online environment, and has worked with companies that have implemented the Townsmith Suite, including Delta Road.
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