Differences of Amazon and Walmart Pricing Strategies Paper

Please read the comparison and answer the 3 questions below completely and thoroughly. Each question is worth 25 points possible. You must upload your answers in a Word document that will be run through Turnitin (answers copied from another source will result in a zero).

“Less than a decade ago, no one considered that Amazon might someday give Walmart something to worry about. But today, Amazon is a $107 billion a year company. Walmart, though, brings in about 4.5 times more sales, at $482 billion. However, Amazon has grown 20 percent annually over the past four years, while Walmart’s growth over the same time period has been essentially flat. Already, Amazon is cutting in to Walmart’s sales. And, if this pace keeps up, Amazon could be the one to ultimately dethrone the king of retail. At the center of the battle is price. While low price may ultimately declare a winner in this game of cat and mouse, both parties also need to take extreme caution when it comes to overdoing it. Reckless price-cutting will likely do more damage than good to both companies. In the process, both companies are trying to find other ways of outdoing each other, like personalized service and delivery options. Amazon seems to have the upper hand in this area, but Walmart is making strides by investing heavily in its fulfillment network and combining the best of its online and off-line operations. The winner will have to do more than offer the lowest price. Selection, convenience, and buying experience will be vital to winning online.”

Please answer the following questions:

For Amazon and Walmart, is it more important to have lower prices or to have the perception of lower prices?

What pricing strategies do the two companies use? Do they use the same ones? Why or why not?

In the battle for online dominance, just how important is low price? How important are other benefits that Amazon and Walmart each deliver?