No Mercy No Malice

How Walmart Can Beat Amazon at Its Own Game

What Walmart gains by joining the subscription economy

Few firms counterpunch like Walmart. “Innovation” has a new, first-of-its-kind feel. But most stakeholder value is a function of firms benchmarking, copying, or stealing other firms’ great ideas: improving them, putting more wood/capital behind the arrow, or placing it on broader platforms.

Walmart is planning to launch Walmart+, their response to Amazon Prime. This makes all sorts of sense. Every CEO has to convince investors they should buy shares, as there is a good/great chance the equity will double in the short to medium term. So, logically, the CEO is saying they can double revenue. Even if Walmart recognized operating leverage, they may need to add $400 billion or more to their top line. So, Doug McMillon needs to add the equivalent of the U.S. oil industry to his revenue line. That’s unlikely. So, what to do?

Simply put, the most accretive action taken by any $10 billion or larger business is to move from a transactional model to recurring revenue. This exploits one of the fundamental flaws of our species: the inability to register time. Time flies — it goes faster than our estimated consumption of a product during a given time period. Only 18% of gym members go to the gym consistently.

In addition, the markets are a reflection of ourselves, and humans hate uncertainty. Waking up next to a stranger is…