Some states impose sales taxes for online purchases, but strategic shopping can minimize that extra expense.
Amazon or Walmart: The Cheap Holiday Shopping Guide
This year nearly half of consumers -- 46.7 percent, up from 43.9 percent last year -- will shop for holiday gifts online, according to an annual survey by the National Retail Federation (NRF). A related study by research company ShopperTrak anticipates a slight 2.2 percent decrease in foot traffic to bricks-and-mortar stores, even as holiday retail sales increase 3 percent over last year.
To find the answer, we embarked on a holiday shopping spree that pitted Walmart, the big-box behemoth, against Amazon, the online superstore. We chose these two vendors for several reasons: They are the giants of American retail; they are universally recognized for offering an extensive array of products at low prices; and they represent two very different business models and shopping experiences.
After filling our carts with holiday gifts and checking the bottom line, we concluded that the choice between Amazon and Walmart is a personal call. A strict price comparison shows Walmart is the cheapest, but barely, for a final tally of most items on our shopping list. For a small sample of identical gifts, Amazon wins by a greater margin with the lowest price total. If you figure in applicable sales taxes, shipping costs, and convenience, Amazon retains its lead. But Walmart holds its own with customer-friendly price-matching and return policies.
We started our research by comparing the cost of a list of gifts at each retailer. We shopped at a Walmart store in early October and clicked away on Amazon during the same period. Into our two shopping carts went items from a variety of categories, such as electronics, toys, home goods, clothing, and athletic gear. We quickly discovered that Amazon and Walmart carry very few of the exact same items. Of all the gifts on our list, only 16 were a one-to-one match (same brand, same technical specs). The shopping cart totals for those 16 items reveal Amazon as the cheapest, by $47.51, or 3.5 percent. The bottom line at Amazon came to $1,305.64 compared with $1,353.15 at Walmart. A recent study by the investment bank William Blair & Company used a different methodology but essentially confirmed our findings. As reported by The Economist, the research found that of a randomly selected group of 100 items sold by each, only 28 shared identical specs and these were 5.4 percent cheaper, on average, at Amazon.
A Walmart storefront.
But the limited array of identical, cheap Christmas gifts available at both retail venues didn't fulfill our holiday shopping list. So we also searched and compared prices for 41 similar items and found that Walmart bested Amazon by $9.13. The bottom-line total at Walmart was $3010.87 compared with $3,020.00 at Amazon, a 0.3 percent price difference in Walmart's favor. (The NRF survey found that consumers expect to spend an average of $704.18 on gifts and other seasonal purchases this year. We wanted to include an assortment of big-ticket items in our comparison, which made for higher totals.)
Our shopping trip detoured from our usual mission of finding the best low-cost products. This time we zeroed in on price alone and looked for the cheapest item carried by each retailer in a given category. We glossed over judgments of quality primarily because we didn't physically compare one item against another and consumer reviews didn't prove helpful. So keep in mind that, at rock-bottom prices, you sometimes get what you pay for. For example, a Mainstays bath towel we examined at Walmart costs $3.97 and is very basic -- forget plush, warm, and fuzzy. The cheapest bath towel we found at Amazon, the Revere Mills Waverly, costs $11.99 and may be closer to what you think a gift-worthy towel should be.
Differences in inventory aside, a simple price comparison can be misleading. For one thing, prices posted on Amazon change frequently -- in some cases, hourly -- so the prices recorded on the days we shopped in early October may be slightly different when you shop. In addition, shipping costs and sales tax are not included in our cheap holiday shopping cart totals. Obviously, shipping costs are irrelevant if you do your shopping at an actual Walmart store, and they may not matter at Amazon, either; there are no extra charges with Amazon if your purchase qualifies for free Super Saver Shipping or you shell out $79 to join Amazon Prime for a year. Sales tax, however, can affect total cost. Walmart charges sales tax in states that levy one, even when the transaction goes through Walmart.com. Amazon doesn't add in sales tax except when items are sent to a handful of states.
The Kindle on sale at Walmart.
Return policies are another factor worth noting before embarking on your holiday shopping spree. Walmart's 90-day policy is hassle-free. Refunds are handed over right away, even when certain items are purchased online and returned to a Walmart store (return shipping costs are deducted from the refund if you send back what you bought through Walmart.com). Amazon has a 30-day return policy on most items, but longer on holiday gifts; be sure to check the policy for each item you buy. Amazon deducts return shipping costs from the refund, which takes time to be processed.
Price matching is an invaluable aid for frugal shoppers on the hunt for cheap Christmas gifts, and here, too, we found a big difference between Amazon and Walmart. Amazon matches prices only on televisions, whereas Walmart maintains an ad-matching program that meets the price listed in any advertisement the shopper has seen. In addition, a new Christmas Price Guarantee will match a local retailer's advertised lower price on the identical item you already bought at Walmart.
Finally, the elephant in the room: Shoppers seem to either love Walmart or hate Walmart. We came across numerous customer comments, posted online and in interviews, alleging negative in-store experiences, ranging from crude customer behavior to indifferent employees, long lines, and slow checkouts. For some, avoiding all that by shopping from home is worth the more complicated return process, lack of a lowest-price guarantee, and inability to know exactly what the item looks and feels like. That said, we enjoyed a pleasant shopping experience on the days we visited Walmart. The store was clean, employees were polite and helpful, and lines were minimal.
What follows is a detailed, side-by-side comparison of how Amazon and Walmart fare in the cheap holiday shopping sweepstakes. Bear in mind that Walmart's offerings vary somewhat by location and Amazon prices may differ from one day to the next. If you find something cheaper or have different information from what we present below, please let us hear from you in the comments section.
Amazon scores with a huge selection of items and brands and a positive overall user experience. Frugal shoppers appreciate the 24/7 stay-at-home convenience of shopping at Amazon, the low prices, and the free shipping options. The scale of the site makes navigating unwieldy for some, and others may have qualms about ordering items without first looking them over.
Walmart shines in several areas, offering a return policy that's easy to understand and use, price-matching programs, and low prices. The in-store selections are somewhat limited, but Walmart.com expands shopping options. Some shoppers are put off by crowds and slow checkouts and the need to leave home to make a purchase.
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