The 5 Trillion Dollar Rivalry

 

Two of the biggest retail players are Amazon and Walmart, are set for a $5 Trillion War to become the most dominant player in the industry. Walmart has been around for 30 more years than Amazon. One is Goliath trying to be David, and one was David that is slowing becoming Goliath. Which company comes out on top?

  Amazon Walmart
Employees 650000 2.2 Million
Fulfillment Centres 75 2
2019 Revenue $281 Billion $514 Billion
Physical Stores Almost 600 11300
E-Commerce Revenue $141 Billion $22.4 Billion
Profits $11.6 Billion $6.6 Billion
Total Products Sold 353 Millions 35 Million
Total Countries Sold 200 28


After Closing analyzing both these giants we can conclude that Amazon is trying to be Walmart and Walmart is trying to be like Amazon. This has led Amazon to fear that if Walmart start same-day shipping, Walmart already has the infrastructure ready since their physical locations are at a 10-mile radius from each other.  Although Walmart is bigger they realised that if they don't get their act together and learn the strategies that Amazon utilizing, they would be surpassed.

If you closely look at the Ecommerce revenue of both companies, Walmart did $11.5 Billion in 2018 they doubled their revenue in 2019 to $22.4 Billion.
In 2019, Amazon sold 353 Million different productions and Walmart sold 35 Million different products out of which 120K different products in their physical stores.
Twice the amount of revenue but half the amount of profitability? Why?

  Amazon Walmart
Revenue Profit Revenue Profit
2019 $280.5 B $11.6 B $514.4 B $6.6 B
2018 $232.8 B $10.1 B $500.3 B $9. B
2017 $177.8 B $3 B $485.9 B $13.6 B
2016 $135.9 B $2.4 B $499.4 B $14.6 B
2015 $107 B $596 M $485.6 B $16.3 B
2014 $89 B -$241 M $476.3 B $16 B


What's the reason for Walmart's increasing revenue and declining profits?
Walmart has been investing to diversify into similar industries like Amazon and majority increase their E-Commerce presence.

Companies Owned by Amazon
Audible, Zappos, Alexa, IMDB, Whole Foods, Ring, Souq, Twitch, Goodreads.
Companies Owned by Walmart
Flipkart, Sam's Club, Vudu, Jet.com

The Entire Retail industry in America alone was $5 Trillion, out of which 10% was online (E-commerce). Which company doesn't want a piece of that?

Due to Amazon's aggressive & exponential growth have created a lot of enemies. 'An enemy of an enemy is a friend' - that is why Google has partnered with Walmart to battle against Amazon. The decade ahead will thus not see Walmart surpassed without a good fight. This rivalry will decide the shape of retail in the next decade.

 

Many companies are not comfortable to take the risk to diversify and infuse more capital for the growth of the company by reducing their profitability. Short term reduction in wealth can create a drastic difference in your long term market capitalization and wealth creation. The decision is yours, do you want to fight for dominance or fight for existence? Start investing now!

 

 

Reference Links: 

https://www.forbes.com/sites/blakemorgan/2019/08/21/amazon-versus-walmart-goliath-versus-goliath/#1e4585af4674

https://www.forbes.com/sites/jeanmarcfrancois/2020/01/15/amazon-vs-walmart-the-next-decade-will-decide-which-comes-out-on-top/#7661739d4403

https://www.patrickbetdavid.com/wp-content/uploads/2020/03/AmzVsWal.pdf