Amazon vs. Walmart: The Race for Winning the E-Commerce

by September 1, 2020

E-CommerceWhich retail giant is leading in the e-commerce – Amazon or Walmart?

The e-commerce industry has been witnessing major transformation trends over the years. The sector, with each passing day, is experiencing the emergence of new e-commerce markets and players reaching new milestones. Despite this, the two retail titans, Amazon and Walmart, are relentlessly drawing a new line with no sign of end and contending each other to hold the e-commerce crown. There is no wonder that both companies are the world’s largest retailer by revenue, steadily strengthening their product lines and infrastructures.

While Walmart has been around for several years over Amazon, recent years have seen them competing over leading the retail space. Walmart significantly leads in brick and mortar space, while Amazon dominates digital. In its 2020 Annual Report, Walmart shows the extraordinary efforts making significant progress. On the other side, Amazon illustrates immense presence and a massive share of internet sales.

 

Amazon vs. Walmart: Revenue 

In the latest 2020 Q2 earnings report, Amazon announced its net sales increased by 40% to US$88.9 billion in the second quarter, compared with US$63.4 billion during the same quarter of 2019. In addition to this, the company’s net income grew to US$5.2 billion, or US$10.30 per diluted share, compared with net income of US$2.6 billion, or US$5.22 per diluted share in Q2 2019.

Amazon Founder and CEO, Jeff Bezos said, “As expected, we spent over $4 billion on incremental COVID-19-related costs in the quarter to help keep employees safe and deliver products to customers in this time of high demand—purchasing personal protective equipment, increasing cleaning of our facilities, following new safety process paths, adding new backup family care benefits, and paying a special thank you bonus of over $500 million to front-line employees and delivery partners.”

He further explains that “We’ve created over 175,000 new jobs since March and are in the process of bringing 125,000 of these employees into regular, fulltime positions. And third-party sales again grew faster this quarter than Amazon’s first-party sales. Lastly, even in this unpredictable time, we injected significant money into the economy this quarter, investing over $9 billion in capital projects, including fulfillment, transportation, and AWS.”

Conversely, Walmart’s revenue for the second quarter ended July 31, 2020, was US$137.74 billion, a 5.65% increase year-over-year. The company reported net income rose to US$6.48 billion, or US$2.27 per share, from US$3.61 billion, or US$1.26 per share in Q2 2019.

Last month, the company’s e-commerce sales in the U.S. surged 97% as customers shipped packages their homes and used curbside pickup. According to Walmart CEO Doug McMillon, the company will look to build on these gains by adding a membership service. The program, called Walmart+, will stimulate deliveries for customers through curbside pickup and delivery, strengthen relationships with them and collect valuable data.

 

Amazon vs. Walmart: Business Strategy

Essentially, Amazon has grown as a book-selling website to other areas like logistics, consumer technology, cloud computing, and most recently, media and entertainment. Currently, it is one of the leading e-commerce companies in the world and accounts for roughly 50% of all e-commerce sales in the U.S. The last couple of years have seen major acquisitions by Amazon, such as PillPack acquisition for US$1 billion in 2018, Whole Foods acquisition for US$13.7 billion in 2017, Souq.com acquisition for US$580 million in 2017, acquisition of Twitch Interactive for US$970 million in 2014, and more.

On the innovation front, Amazon continues testing, learning and pivoting strategies with grocery shopping and delivery service options. Amazon Go is the first-of-its-kind physical store that allows customers to checkout without to wait in lines for making payment. Amazon also leverages robots at its large fulfilment centres and recently started using autonomous robots to deliver packages in select markets.

On the other side, the “Everyday Low Prices” strategy is Walmart’s core business model. The retail giant leads the U.S. retail market through its lowest prices. Walmart sells a wide range of products and typically focuses on selling products at the lowest cost. As of March 2020, the company operates over 11,500 retail units across an increasing number of countries and also has e-commerce websites in several more. It employs millions of associates worldwide, with more than 1.5 million of these residing in the U.S.

To reap more growth, Walmart increasingly invests in improved customer experience. In 2017, the brand invested even more into lowering the prices that helped it in generating better revenue, over US$485 billion. In 2018 and 2019, the company grew its distribution network to bring more convenience to its e-commerce customers, garnered net revenue grew to US$500.3 billion in 2018 and US$514.4 billion in 2019. From the innovation perspective, Walmart has already automated much of its supply chain and online order pickup processes. Also, the company last year announced to add 1,500 robots to its hundreds of stores.

In a nutshell, both companies have made significant progress in the e-commerce space and created customer-centric business cultures. Walmart and Amazon are continuously investing heavily in digital growth, expanding the number and variety of products they offer via both online and offline, and establishing partnerships to expand their business reach.