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Walmart Can Steal Amazon's Thunder When It Comes to Convenience

Walmart should be able to spread cashier-less shopping faster and more broadly than Amazon.
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In my opinion, shopping should be similar to a military operation. The goal is to gain entry, extract the desired items quickly and efficiently, and get out of there.

The most frustrating part is waiting in line at checkout. Now, it appears that is about to change.

Amazon.com Inc. (AMZN) recently made headlines when it introduced Amazon Go retail stores. At these stores there are no cashiers; you simply walk in, put the items that you want to buy in your cart, and walk out. (AmAzon is a holding of Jim Cramer's Action Alerts PLUS charitable trust.)

On Monday, Walmart Inc. (WMT) announced its first attempt at duplicating the Amazon Go shopping experience, using a Sam's Club store in Dallas for the launch. Walmart's new cashier-free concept is called Sam's Club Now.

At this point, Amazon's vision of cashier-less shopping is more advanced. Amazon Go uses sensors that react when an item is taken from a shelf and placed in a cart, and a series of cameras. Meanwhile, Sam's Club Now shoppers will scan items with their phones and will be billed accordingly.

Amazon may be first to market with this concept, but the company doesn't have enough of a physical presence to take full advantage of it. There are only five Amazon Go locations at present and less than 500 Whole Foods stores. Bloomberg recently reported that the company will open 3,000 Amazon Go stores by 2021, but this hasn't been confirmed.

Meanwhile, Walmart's less sophisticated model can be implemented more quickly and easily and can be upgraded over time. The world's biggest retailer currently has more than 11,700 physical locations in 28 countries. By the time Amazon is ready to facilitate convenience in a meaningful way, Walmart will have already beaten it to the punch.

In addition to providing a cashier-free shopping experience, the Sam's Club Now app uses technology that can analyze your past purchases to generate a shopping list and can direct the shopper to the desired items within the store. If you've ever shopped in a cavernous big-box warehouse store, you'll appreciate the guidance.

On Oct. 4, with Walmart trading at $94, I pointed out a "tight cup-and-handle pattern" on the stock's weekly chart and gave Walmart a price target of $110. Less than four weeks later, the stock is one-third of the way there. Walmart broke out from the cup and handle despite a volatile market environment.

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Walmart Inc. (WMT) Source: TradeStation

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Now let's compare the relative strength of Walmart (green) vs. Amazon (red) since the start of September. The SPDR S&P 500 ETF (SPY) (blue) represents the overall market during that time.

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Amazon (AMZN) vs. Walmart (WMT) vs. SPY Source: TradeStation

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Walmart is also upgrading its online experience. Beginning in November, the retail giant will offer free two-day shipping on millions of items as long as the shopper spends more than $35. With the company making the right moves to generate both physical and online sales, I'm sticking with my long position in Walmart.

At the time of publication, Ponsi was long WMT.