Jason Del Rey has spent the last 15 years reporting on e-commerce businesses, including Walmart and Amazon. Now, in a new book that hit shelves today called Winner Sells All, he tells the broader story of Walmart — which long focused on preserving what it had built — and its epic battle with Amazon, whose land-and-expand strategy has led it into the lucrative cloud-storage business, the grocery business, the logistics industry, hardware and even Hollywood.
Indeed, what began as an annoyance to Walmart and later evolved into a bare-knuckle fight has in more recent years turned into an existential crisis for the 61-year-old business — and Del Rey finds out what the company is doing about it. At the same time, he examines the challenges that 29-year-old Amazon increasingly faces, including a growing inability to move quickly as it once did and its stubborn reluctance to address serious criticisms.
With access to Walmart CEO Doug McMillon, Jeff Wilke, the now-former CEO of Amazon’s Worldwide Consumer business, and 150 other sources, including other executives at both companies, the story the Del Rey tells is about innovation but it’s also about what the growth of these two giants have meant for consumers, for their employees and even for the environment. We talked with him yesterday, excerpts from which have been lightly edited below for length.
TC: I wonder if you knew going into this that this would be a story of how Walmart has only ever tried to play catch up to Amazon, and often fallen short. Amazon’s market cap is more than three times bigger than Walmart’s at this point — $1.3 trillion to 400 billion. The book seems to underscore that this rivalry is over. Would you say that’s accurate?
JD: The book does lean in rather heavily to the Walmart tenure of CEO Doug McMillon over the last 10 years and all the trials and tribulations of an amazingly successful company being faced with an upstart that it first ignores, then pays attention to, but doesn’t really execute well on its competitive strategy. Inside the company a lot of you know, the CEO chief among them felt like [by 2016] that, ‘If we don’t make up some ground soon, I know it sounds ridiculous to some people, but we may really not be around in a couple of decades.’
You say in the book that you once spoke with U.S. Congresswoman Pramila Jayapal, whose district includes Amazon’s hometown of Seattle and she said Amazon’s usual response to critics is that there’s just a blanket dismissal of any criticism being real. Do you share that same observation?
Amazon is now an easy target for different groups — often for some really credible reasons, but there are also hosts of people who just love to hate the company. That said, in the last few years, especially with regard to how they’ve interacted with powerful people in government, [Amazon has] just shown either a lack of awareness or just arrogance [and] unnecessarily made more enemies than they needed. [Meanwhile] Walmart execs, whether self-serving or not, have gone on listening tours of critics over the years, at least pretending to want to hear the other side of things.
Slow-moving Walmart wanted Quidsi and lost it to Amazon; it lost PillPack to Amazon. Leaving aside Amazon’s cultural issues, labor relations issues, and DOJ issues, etc., have you been particularly surprised by any of Amazon’s own operational missteps?
A lot of media and even folks in tech assumed [that after acquiring Whole Foods in 2017 that] Amazon would enter physical retail as the innovator and the smartest guys and gals in the room and just kind of get it right, and it’s really been a pretty big failure to date. One thing they’ve struggled with is thinking that technology differentiation would be enough, and not that they haven’t cared about the operations of getting the right inventory or the right food, but that stuff has felt like an afterthought. So you walk into some of their physical retail establishments, and the experience in the store kind of feels like an afterthought to the checkout technology or the high tech carts in some of their grocery stores that are counting your stuff. For some people, that’s cool enough, but for the everyday consumer, I think they’ve struggled with how to differentiate.
Amazon has since bought PillPack. It has acquired One Medical [which has many hundreds of brick-and-mortar offices]. Do you think we’ll see similar missteps in its approach to healthcare?
Amazon had a service called Amazon Care, which was a mix of telehealth and in-home concierge visits. It was just for Amazon employees at the start and ended up getting shut down before it could really expand outside of that, but when I talked to nurses and technologists who worked on that project, [they said] Amazon was often entering the space thinking about what needed to be improved in healthcare or what was wrong, versus what was already right. I don’t know if that’s arrogance, or just the way they operate. But some of the nurses I spoke to said that there were healthcare record software services that were really good, yet [Amazon] spent all this time trying to build [its] own from scratch, and that caused all sorts of problems.
Regarding the PillPack acquisition, I tell an anecdote in the book [about] the entrepreneurs who built PillPack and went to work at Amazon, and they had some success, but they also felt stifled after a while and realized how hard it would be to build pharmacy technology inside of a now pretty old retail technology division, so not that different from Walmart . . . Bureaucracy has crept in and entrepreneurs can have a hard time there as well.
Sometimes companies reach such a scale that they seem completely immune to any sort of upstart until they don’t. We’re talking here about Amazon outmaneuvering Walmart; who should Amazon be most worried about? If you had to bet on who could topple Amazon, who would you choose?
I think Shopify is still a very interesting company. I know it’s not a retailer, but it’s a really formidable tech company. They maybe overextended themselves, trying to get into logistics and had to spin off that operation at a loss. But there are really smart folks who care about independent businesses, so the question will be whether they ever can or ever really want to build a consumer-facing presence, and Amazon pays very close attention to them. The other one I think is TikTok. Amazon is essentially a transactional portal, right? A lot of people go there knowing what they want, so they’re going there to buy something, not to shop. I think TikTok still has a ton of potential to play a big role in people actually wanting to shop right now online and not just going somewhere just wanting to press check out or buy, so there’s a lot of potential. Whether they can fulfill it, I have no idea. There’s also a really good chance that 20 years from now, we’ll look back and say XYZ company is now a massive, massive business, and it didn’t even exist back in 2023. My hope is maybe for the health of the economy and the health of society, that might be the case, as well.
We’ll have more from this interview later this week in podcast form; stay tuned.