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Amazon and Walmart slug it out, making room for niche marketplaces

One of the biggest battlegrounds in the global online commerce space is shaping up between two giants of retail, Amazon and Walmart. The two behemoths are going head to head and, according to this report in Forbes, “online marketplaces will be the main street where the showdown takes place.”

Amazon has of course established itself as the biggest player in the online retail space over the past decade, while Walmart is the dominant bricks-and-mortar retailer in the US.

The Amazon story is synonymous with online retail, and Jeff Bezos’s Seattle-based company continues to expand not only its online retail operations but also its operations through Amazon Web Services and entertainment division Prime.

Walmart, on the other hand, is better associated with the big box physical retail model that proliferated in the US during the 1950s and 1960s and spread out around the world. While Amazon is the biggest online retailer, Walmart is the world’s largest retailer.

The clash between the two is also significant because it heralds a move by both to stake a claim on becoming the preeminent global omnichannel retailer (Alibaba may have some say in this), with Amazon looking at ways of boosting its physical footprint while Walmart attempts to muscle in on Amazon’s online empire.

Walmart signalled its intent to take on Amazon recently with its acquisition of for more than $3 billion. shot to prominence on the back of its deep discount marketplace model and Walmart has said it thinks will provide it with the shot in the arm it needs to match Amazon’s online know-how.

But the jury is still out on whether acquiring a company like, despite its online marketplace experience, will really bring Walmart up to speed against Amazon, which is a company steeped in online retail culture and experience.

But while these two big guns fight it out, niche marketplaces are moving in and carving out highly specialised segments by aligning tribes with marketplaces. In marketing terms, a tribe is a group of consumers who are active in particular communities of interest.

While Amazon and Walmart battle for the mass consumer market, opportunities will continue to open up for savvy operators who can see underserved segments and connect them to niche marketplaces.

Even Bezos, in his 2016 letter to shareholders, is wary of the danger of smaller, nimbler competitors eating the Amazon pie: “… if we’re not vigilant and thoughtful, size could slow us down and diminish our inventiveness.”

The sheer size of the Amazon Marketplace makes it susceptible to attack by highly focused, deep vertical marketplaces that focus on matching tribe to marketplace.

An interesting example of this is the persistent success of Australian-focused online bookseller Booktopia, which has managed to compete against Amazon’s massive international scale advantage by homing in on the niche market of Australian book lovers.

Booktopia has managed to carve out its own place in a book market that Amazon has basically dominated internationally for the past 15 years. It has done this not by attempting to get as big as Amazon, but by cleverly marketing to its customers and engineering an e-commerce offering that works for that customer. It has found its tribe and is cultivating a connection with them.

As Booktopia CEO Tony Nash told Internet Retailing in early 2016: “We have over 100,000 titles in stock and at competitive prices, that is true, but we also employ book merchandising experts to organise our core categories in conjunction with our proprietary algorithms.”

“Plus we employ journalists experienced in the arts that write compelling newsletters and interview authors in our recording studio for our podcasts and YouTube TV channel introducing book buyers to new titles they would never have considered before,” Nash said.

The Booktopia story has some parallels to what a marketplace such as BikeExchange is also doing in finding a strong consumer tribe (cyclists) that sits in a commercial landscape often marked by fragmented online offerings.

In essence, the motivating idea for these marketplaces is to be something for someone, not all things for everyone — which is what mass consumer retailers like Amazon and Walmart are doing.

By identifying and connecting with the tribe they want to serve, niche marketplaces have a great chance of presenting an attractive alternative to the likes of Amazon and Walmart for lucrative and underserved market segments.

Jason Wyatt is the co-founder and managing director of Marketplacer.

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