It seems a ridiculous question to ask, with the business set to take 50% of the US e-commerce market by the end of 2018, but it does look as though Amazon might have a millennial problem. Here, we take a closer look at why the company’s biggest competitor, Walmart, is taking advantage of this, and what steps Amazon will have to consider to wrestle back the initiative.

Walmart can hardly make a move these days without it being dubbed as a means to try and decrease Amazon’s market share. However, the retailer’s most recent decision to create a digital marketplace on its site, does seem to be aimed at winning over parts of Amazon’s vast customer base.

The new service will create an “online shopping centre”, with brands having their own ‘shops’ on the website. Outdoor-gear company Moosejaw is now featured on Walmart's website with its own online destination. Purchased by Walmart in 2017, Moosejaw's assortment of merchandise includes items from brands like Patagonia and Canada Goose, representing a departure from what many customers have come to expect from Walmart and its everyday low prices.

With Moosejaw and other companies Walmart has recently purchased (such as Bonobos and ModCloth) all having a core audience base of millennials, it looks like this is the group they will be hoping to pinch from under Amazon’s noses.

With Amazon also adding more brands to its website, the two companies have been competing to offer a wider assortment of items to shoppers. Some brands working with Amazon today include Chico's FAS and Calvin Klein. However, it is not hard to imagine apparel brands taking their business from Amazon to Walmart, as while both have huge reach, the fact Walmart’s platform is in its infancy means brands may get a bigger share of the website real estate in comparison to Amazon.

New ideas, new brands

So should these moves be of real concern to Bezos and co? Well they should certainly pay attention. With Walmart looking to partner with brands that put the millennial consumer at their heart, Amazon will need to adjust their own brand partnerships, with the likes of Calvin Klein more popular among Gen X. If they don’t do this, then they risk their biggest rival gaining popularity among a group which is set to have the biggest spending power for years to come.

However, despite this warning, Amazon is seemingly still not trying to compete with Walmart’s strive for millennial hearts and minds. They have recently partnered with J Crew, who while an established brand - especially in the US - have had problems engaging the millennial audience, as this article outlines. This team up represents more of a short term fix for Amazon, working with known brands, until they can convince less established, more millennial friendly businesses to be part of their marketplace.

Can Amazon continue with business as usual?

Saying that Amazon isn’t partnering with many millennial brands doesn’t mean that no millennials visit Amazon. In 2017, 30% of their US consumers were under the age of 35, with 39% of their Prime members falling into the same age bracket.

The Seattle behemoths sell goods across almost every vertical imaginable, so the fact that they are under-indexing in one particular age group in, within one particular category (apparel), won’t have a noticeable effect on their bottom line.

However, it’s not like Bezos to accept defeat so easily. With Walmart pipping his business to the acquisition of Flipkart earlier this year, you can bet he won’t take the same company trying to steal the crucial millennial audience (while at the same time effectively ripping off Amazon’s “online shopping centre” model) lying down.

Tapping into direct-to-consumer brands

Fortunately for Amazon, there’s no shortage of millennial apparel brands out there at the moment. With a plethora of such businesses operating direct-to-consumer models and building huge millennial fan bases on platforms like Instagram, these would be the perfect partners for Amazon to fight back with. The challenge here will be convincing these brands that it’s worth sacrificing their independent image for a partnership with the most corporate of corporate retailers.