Amazon vs. Walmart: The tech giant is officially the biggest retailer outside of China, but Walmart is stepping up its own e-commerce efforts
Amazon is officially the world's biggest retailer outside of China. Data from FactSet reveals that more than $610bn was spent through Amazon in the 12-months that ended in June — overtaking US retail giant Walmart for the first time ever.
Amazon may have only just overtaken Walmart in terms of actual sales, but it's been the more valuable company for a much longer time, first surpassing Walmart's market capitalization more than 6 years ago, as investors generously (and correctly) extrapolated Amazon's trajectory.
Bigger is better
Walmart's strategy over the last half-a-century has been to become the ultimate big-box retailer. Bigger stores, more items, lower prices — everything has been about scale. Over time Walmart has grown to over 10,500 retail locations across the world, many of which are absolutely enormous (the largest comes in at 260,000 square feet, which is about 6 acres, or 24,000 square metres).
But even with some of the biggest supply chains and stores in the world, you'll never be able to compete with the sheer range of items you can sell online. A typical Walmart store might come with 100,000+ items (known as SKUs in the biz), but online that number can reach 5m, 50m or even 100m+.
Margins in online are also likely to be better. Even Walmart, which is about as big as you can get as a pure retailer, only squeezed out a relatively slim 5% operating profit margin in its latest quarter, which after interest costs and taxes was a 3% net profit margin. That still translated into a huge amount of profit ($4bn+), but it doesn't give much room for error.
