Report: Amazon’s price advantage narrows in key holiday category

Watch out Amazon, Walmart may be giving you a run for the money in the holiday toy aisles.



Walmart is making big strides to challenge Amazon’s dominance in pricing, promotion and assortment of toys and games this holiday season. That’s according to Boomerang Commerce’s annual “Boomerang Insights: Toy Category report,” which found that Walmart has more than doubled its online product assortment between the first and third quarters of 2016 and is leveraging its recent Jet.com acquisition for competitive pricing.



Toys “R” Us is also pursuing a strategy of increased assortment, as well as offering exclusive product lines. Meanwhile, Target is eschewing assortment expansion in favor of special pricing promotions, according to the report.



Other key findings of the report include:



• Amazon is still, by far, the leading retailer for toys and games with over 5 million items in the category — compared with less than 100,000 for other retailers — and with a pricing strategy that optimizes based on external market and internal data signals.



• Jet.com has the lowest prices, meeting or beating the usual leader Amazon by an average of 64% — up from 55% in 2015 — on its overlap of most popular items.



Walmart is a close second to Jet by pricing 55% of popular items the same or lower than Amazon, but this represents a 9% point decrease year-over-year.



Meanwhile, Target increased its price competitiveness with Amazon by 8 percentage points year-over-year to meet or beat Amazon’s price on 42% of popular overlapping toys and games.



• Walmart and Jet offer the most aggressive price discounts. Compared to list prices on Amazon, Walmart discounted 54% of popular items, followed by Jet with 47%, and Target with 41%. Concurrently, Target is seeking to win customers through promotions, such as 20% discounts for select toys, “buy two, get one free” games and its current “10 Days of Deals” campaign.



• Walmart is becoming increasingly more competitive in assortment with a 66% overlap with Amazon’s most popular items; this represents approximately 1.8 times the nearest competitor.



• After Walmart, Toys “R” Us has the highest assortment overlap (40% with a sampling of Amazon’s popular items, representing a 5 percent improvement over last year.



• Although toys and games specialty retailers struggle to compete on price, their wide assortments within specific sub-categories like video games at GameStop and exclusive LEGO products at Toys “R” Us keep them relevant.