Amazon and Walmart should remarry but they better start planning soon

It’s inevitable.

It always was.

Like two good friends that finally realize they’re actually in love?  No.  This marriage will be arranged for mutual financial benefit – and world domination.

Walmart’s recent numbers and its decision to invest heavily in a new Web site as well as its ongoing support for WalmartLabs speak volumes.  As does Amazon’s announcement to open brick-and-mortar stores, its drone delivery concepts, as well as its new stature as the world’s most valuable retailer:  just a few years ago Walmart would have been the groom, but now it’s the bride.  Not that they both don’t bring a ton to the marriage – they do.  But given recent stock performance, Amazon will have to pop the question.  Walmart should cozy up to the largest retailer in the world – which I suggest it do as soon as possible.

Both companies are sailing toward growing online and offline revenue powered by a global digital infrastructure that enables a massive and continuous distribution and fulfillment process.  But only one has the digital legs to seamlessly integrate into a scalable, global machine.

Due Diligence

Mega-mergers should be discussed contextually.  It doesn’t really matter what Walmart’s revenues were a decade ago or that Amazon began as a book retailer.  What matters are the trajectories that will influence their business models and how those models can profitably and flexibly adapt to endless changes in the retail world – which will reinvent itself as quickly as Uber, Facebook and Tesla change the rules of the game whenever they choose.

The real key to a workable marriage is the recognition that past retail behavior will in no way, shape or form resemble future retail behavior.  Walmart is very late not just to the digital retail party but also to the drivers of digital retail trends and the digital infrastructure that enables market agility.  Spending a lot more money on “online retail”or an improved Web site with better overall “user experiences” is only part of the answer:  changing a highly successful, stubborn retail culture is a much bigger challenge.  This is a classic case of anti-disruption where existing revenue streams blind companies to future streams that may in fact cannibalize the old ones.  Said differently, Amazon is not Walmart’s only competitor.  Walmart is Walmart’s largest competitor.

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