Study: Amazon still winning the online price wars but Walmart closing in
An expanding price competition gulf separates two retailers from the rest of the retail industry.
Amazon ranked as the lowest-priced retailer for the 7th year in a row in Profitero’s seventh annual Price Wars study, which compares the online prices of more than 14,000 products across various leading online retailers. Close behind is Walmart — only a 4% gap separated Walmart and Amazon prices across identical items, a 2 ppt improvement from 2022.
Compared to last year, Walmart became more competitive in 10 categories, particularly in video games, fashion, and home improvement. Notably, Walmart's prices in these categories were only 10%, 7% and 5% more expensive than Amazon's, respectively, marking a big improvement from last year when the price differences were 19%, 12% and 9%, respectively.
The retailers featured in the study included Amazon, Best Buy, Chewy, CVS, Dick’s Sporting Goods, Gamestop, GNC, The Home Depot, Kohls, Lowes, Macy’s, Nordstrom, Petco, PetSmart, Target, Ulta, Walgreens, Walmart and Wayfair.
During a three-month period of comparing online prices daily, Profitero found Walmart and Amazon to have identical prices across identical products 70% of the time, highlighting the fierce rivalry between these two giants. By contrast, Target and Amazon only matched prices 26% of the time during the three-month study.
Key highlights from the Price Wars Study are below:
•Best deals in video games and fashion: Amazon maintained a considerable price advantage in video games and fashion, with prices on average being 9% and 7% less expensive than its closest competitors, Best Buy and Walmart, respectively. In beauty and toys, Amazon had only a narrow 2% price difference compared to its closest rivals.
•Target's mixed outcomes: Target saw mixed results in its performance against Amazon, with prices increasing to be 16% more expensive than Amazon, compared to 15% in the previous year. Target improved in seven out of 15 categories, particularly in home furniture, but slipped in the other eight.
•Dog-eat-dog: A mere 1% and 2% separated Chewy and Petco from Amazon in pet supplies, making pet the most hotly contested category in the study. Chewy’s competition with Amazon is so fierce that they shared the same prices 93% of the time Profitero checked.
•Convenience comes at a Cost: On average, CVS was 52% more expensive than Amazon for health & personal care items; Walgreens was 42% more expensive.
“Amazon’s and Walmart’s solidifying price leadership has significant implications for retailers, not just for holiday sales but advertising investments as well,” said Mike Black, CMO of Profitero. “If a retailer’s product ads are showing up alongside competitors with much higher prices, their conversion rates and ROI won’t be great. Retailers should consider adjusting ad bidding in real time based on competitive signals so that budgets are maximized on better priced products with a fighting chance. If you can’t beat ‘em on price, beat ‘em on agility.”
Only identical items available and in-stock in the same pack configuration were compared. Data was collected daily over 12 weeks (July 10 - Oct 1, 2023), with daily prices averaged over the full period for comparison. Prices for the same items were collected within 24 hours of each other to ensure validity of the comparisons.