Amazon vs. Walmart: Online Shopping in Michigan
Amazon, the online commerce company, has received approval for its new fulfillment center in Kent County’s Gaines Township. After a unanimous vote on May 14, plans were set for Amazon to build its fourth fulfillment center in Michigan.
A fulfillment center is where Amazon will store, package and ship many smaller items such as books, movies, electronics and toys. Sellers send their merchandise to the site for sale online, and the items are shipped by a third party without the need for the seller to get involved.
The site of Amazon’s latest Michigan center is at the corner of 68th Street and Patterson Avenue, south of downtown Grand Rapids. The land is currently owned by Grand Rapids-based furniture manufacturer Steelcase; Amazon will be leasing the land from the company, while a third-party developer will build the center.
The project is expected to bring in a total capital investment of $150 million and create 1,000 full-time jobs. In addition to offering a benefits package, the company will offer a 95 percent prepaid tuition program for its associates. The Michigan Strategic Fund has also approved a $4 million performance-based grant from the Michigan Business Development Program to support the project. Michigan was chosen by Amazon over competing states throughout the Midwest.
The announcement of the development comes after Michigan lost a bid earlier in the year to be the location of Amazon’s second headquarters. In January, Amazon said the reason Detroit was taken off the list wasn’t due to money or location – it was about people. Amazon said that there wasn’t a strong enough pool of talent in the area to staff a second headquarters.
Sandy Baruah, president and CEO of the Detroit Regional Chamber, said, “The creativity, the regional collaboration, the quality of the bid document, the international partnership with Windsor – all of that got incredibly high marks. We were good, but we weren’t good enough on the talent front.”
What Amazon meant when it referred to talent is that there is a large amount of skilled people who are educated here but leave for careers in other states. Detroit’s lack of public transportation also hurt its bid but was said to not have been a deal breaker.
While Amazon continues to expand its physical distribution locations, Walmart has been expanding its online presence. With online purchases across the U.S. up by 33 percent last quarter, many are looking
toward Walmart for their shopping needs, specifically groceries.
Fifteen Walmart stores across Michigan are going to receive renovations within the next year. With a melding of online and physical locations, shoppers will be able to order groceries from the website and have them shipped to their house or brought to the door of the store. There will also be pick-up towers, where shoppers will be able to pick up online orders by scanning a code from their phone.
Along with an upgrade to its website, Walmart seems to be angling toward Amazon’s slice of the e-commerce pie while continuing a large retail presence. Walmart seems to be using its physical stores to its advantage, with plans to add grocery delivery to 800 more stores in the next year.
Amazon is affecting the Lansing area with its own grocery store, due to the purchase of Whole Foods back in 2017 for $13.7 billion. People may see Amazon taking a page out of the Walmart playbook to try and compete, even if to a lesser degree. There are more than 450 Whole Foods worldwide, while there are over 4,000 Walmart stores in the U.S.
Amazon is further integrating themselves into Whole Foods through the Whole Foods app. If you are an Amazon Prime member, you will be able to save money on groceries at Whole Foods. Those savings will only be for people with Amazon Prime memberships. The program had only been implemented in select stores in May, but Amazon rolled it out nationally at the end of June. Amazon Prime is around $120 a year but gets you free shipping on items through Amazon along with an online video library like Netflix and other bonuses. The Whole Foods discount is only adding to member benefits, as there will be no increase in fees.
This business rivalry doesn’t stop at locations. With Amazon increasing its distribution centers around the country, Amazon is also implementing a $13-per-hour starting wage. That is quite the step up from the minimum wage of $7.25 and may be a response to recent bad press about other distribution sites.
Not to be outdone, Walmart also increased its starting wage to $11 an hour. On top of that, Walmart gave bonuses, ranging from $200 to $1,000, to 890,000 of its 1 million hourly employees, depending on its sales for the quarter. The bonuses totaled $560 million, with $11.9 million being given to employees of 119 Walmart stores throughout Michigan.